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State of the Cosmetic Industry, Part 1

By: Rachel L. Chapman
Posted: August 21, 2008, from the September 2008 issue of Skin Inc. magazine.
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Selling intellectual property. Beyond buying into agreements, companies are selling the rights to use their intellectual property. As an illustration, one supplier made available for license a technology it developed that coats titanium dioxide and zinc oxide nanoparticles with a polymer so that the coating scatters UV light, rather than requiring inorganic compounds to absorb the UV and radiate it in a secondary form. The same technology was claimed to help disperse the composite nanoparticles or microspheres within an emulsion to provide a more even coating, in turn reducing the volume of composite required. The technology was offered for use in coatings, paints, plastics, ceramics, inks and fibers, and had potential applications in electronic materials, biomaterials and waste processing.

Acquiring business units. In a more aggressive approach, companies buy out divisions of other businesses that hold certain patents to which they want access. In one case, a major manufacturer acquired another company’s noncore business unit to combine with its own water-soluble polymers business, creating a new business specialized in the cellulose industry.

Joint alliances. Besides inter-industry agreements, alliances are often formed with academia, such as one chemical manufacturer’s agreement with Harvard University in Cambridge, Massachusetts. The company agreed to provide funding to the university, anticipated to be upwards of $20 million, during which both parties would pursue projects in applied physics, chemical biology, bioengineering and materials science, among other fields. In the end, if proof of concept is established in a research project, the company will be given the opportunity to further develop discoveries and innovations for possible commercialization.

In similar agreements, one developer of nanomaterials and additive technologies signed an exclusive licensing agreement with the U.S. Naval Research Laboratory, spanning multiple industries and broad patents in controlled-release nanomaterials. A partnership agreement also was announced between Cosmetic Valley and UNITIS for cooperation on regulations and information on raw materials.

Sometimes such agreements stretch from seemingly unrelated fields, expanding business into untapped market segments. As an example, one major cosmetics manufacturer signed a licensing agreement with a Milan-based fashion house to extend its presence to the fragrance market, serving as a new foundation upon which it could create and market fragrances and related products.