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Brexit – Local Market and Globalization

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On March 29, Theresa May, Britain prime minister, informed the European Union that the UK would trigger Article 50, i.e. the beginning of the negotiation with the European Union to withdraw UK from the Union (the so called Brexit). Article 50 is irrevocable but the way it is written make it unclear what would be the results of these negotiations. The good news is that during the 2 years negotiations period the UK and the EU will have time to figure out the best scenario to maintain a viable trading.

In 2016, 64% of UK cosmetics were exported to the EU, while 66% of EU cosmetics were imported to the UK. Cosmetics sales in the UK were estimated at 11.2 billion dollars in 2015 (retail sales), according to the CPTA (Cosmetic, Toiletry and Perfumery Association in the UK). Analysts predict that UK sales will drop in a Brexit scenario. Raw materials, especially in the high-end segment, can be quite costly to import, and restrictions to trade, coupled with a weak currency, could see costs of development go up. The risk for ingredient suppliers is that the cost for the high-yield innovation that they need to bring to be unique and competitive would only be absorbed by the resilient super premium segment, usually not too influenced by price fluctuations given the high margins.The Mastige and the Mass market would instead be hit by a higher product cost resulting in consumers trade down unless finished products companies would absorb the cost or they would trade for cheaper raw materials with less quality.

It is clear that market localization is difficult. During the last 30 years globalization of trading goods has been the norm and the consumers have adapted to it. Tariff restrictions and higher taxes to import is a way to protect local economies and their produces. It is somehow enforced in some markets, especially in Asia and it would be interesting to see how the BRIC bloc will move in future years and whether trade agreements will stay in place or they will be renegotiated. A recent example is the Trans-Pacific Partnership agreement. This agreement is unique for our industry because it includes a special cosmetics annex that provides a framework for international regulatory best practices that would raise standards and allow our industry to continue to provide safe, innovative products in a timely fashion to consumers around the world. The TPP agreement has been successful in our industry due to cosmetic annex making easier for the TPP partners to import good (the partners being the USA, Canada, Mexico, Peru, Chile, New Zealand, Australia, Malaysia, Singapore, Brunei, Vietnam and Japan). Benefits had included addressing divergent labelling requirements, eliminating requirements for certificates of free sale and eliminating dual registration for products that only differ by shade or fragrance. However this agreement has been questioned by the current US administration that would instead favor bilateral trade instead of a global agreement allowing the US to negotiate better terms for itself and favoring local protectionism if needed.

While Localization would allow bringing value to resources often neglected or obscured by the global offer, it is hard to imagine how we can give up the access to worldwide goods. Global trading should continue while local offer would complement when quality based and competitive. I don’t think that protectionism will benefit our industry that has always favored an open approach to technologies and innovation no matter where they come from, to different cultures and stories, and to raw materials sourced worldwide. The cosmetic industry and their customers benefit from open trade and closing borders would be a mistake.


 

Guest Author: Giorgio Dell’Acqua, PhD

Giorgio Dell’Acqua, PhD, has been an investigator in applied biomedical research for 15 years and he has spent the last 16 years as an executive and cosmetic scientist in the personal care industry. He is specialized in skin and hair care ingredients, finished product development and technical marketing. He has covered multiple roles as a manager and director in different companies specialized in active ingredients and product development. He has helped bring more than 100 successful active ingredients and finished products to market and has authored more than 50 publications in medicine and cosmetic science. In the last 10 years he has been writing and lecturing on sustainability and cosmetic ingredients and helped sourcing, developing and bringing to market many sustainable ingredients. He is a recent award winning speaker on sustainability and natural ingredients and a regular columnist on sustainable cosmetic science.

Open Innovation – Part 2

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The Key to Success is Communication and Trust – by Giorgio Dell’Acqua, PhD

Open innovation is about bringing ideas to business and to market. In order to achieve this goal a network of multilateral collaborations need to be put in place by companies to target the latest ideas and technology with the objective to stay ahead of the competition and attract more customers.

It is clear that one of the key of success is based on matchmaking and good communication so that the common goal between the collaborators is achieved. When is about to transfer technology coming from an external idea to a company, such as the case of University to Company or Spin off to Company some models are better and faster than other models. The bureaucracy and the difficulty associated with technology transfer vary depending the organization. Some university are capable to shorten the transfer process to companies allowing them a quick introduction of the technology to market. Also, licensing agreements can be drafted differently and sometime the royalties’ conditions are prohibitive for small businesses.

When the idea and/or the technology is ready to be transferred, it is about to negotiate a deal, like a licensing agreement that can include royalties, money upfront, etc. To get the best deal one of the keys if not the key, is trust between parties. But how do you build trust between organizations that barely know each other? By creating a process similar to dating. It is the proximity and the day to day get to know each other that can create the bridge for communication and trust.

I would like to give some example. Many universities have created on campus the so called “incubator” for small businesses or startups. One of this university is for example the Engineering School in Lausanne, Switzerland known as EPFL. The “incubator” is by definition the place where the baby is developing before being handed out to an adult to take care of. In other words a place where an idea can grow into a business model. These places are often spin off of the university. The EPFL hosts hundreds of spin off every year. This operation allows young entrepreneurs to “date” scientists and technologists to grow their ideas into a business. Once the business is mature (meaning is funded), the spin off would leave the incubator and enter in adult world.

Another example is the “Cosmetic Valley” in France where technological spin off companies, ingredients suppliers, small and large brands share the same space. Again, proximity is the key. Sometimes, startups are even invited to occupy the same space of a larger company for so called “pilot projects”. The pilot project is meant to get to know each other, facilitate the transferring process and secure a business, a win-win for the companies collaborating: a licensing agreement and cash flow for the startup and exclusive technology for the larger company.

I would encourage the idea of large industrial hubs that would work like campuses where ideas are circulating between different industrial partners that although individually managed can meet on campus for a cup of coffee and discuss about ideas and how to bring them to market.

Proximity and acquaintance is key to open innovation and success.

Acknowledgments: The authors want to thank Ying Jia, PhD for designing the cover for this blog.


Guest Author: Giorgio Dell’Acqua, PhD

Giorgio Dell’Acqua, PhD, has been an investigator in applied biomedical research for 15 years and he has spent the last 16 years as an executive and cosmetic scientist in the personal care industry. He is specialized in skin and hair care ingredients, finished product development and technical marketing. He has covered multiple roles as a manager and director in different companies specialized in active ingredients and product development. He has helped bring more than 100 successful active ingredients and finished products to market and has authored more than 50 publications in medicine and cosmetic science. In the last 10 years he has been writing and lecturing on sustainability and cosmetic ingredients and helped sourcing, developing and bringing to market many sustainable ingredients. He is a recent award winning speaker on sustainability and natural ingredients and a regular columnist on sustainable cosmetic science.

Open Innovation – Part 1

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Co-creating with the World to Accelerate New Consumer Solutions – by Prithwiraj Maitra, PhD

Our Industry is evolving at a very rapid pace driven by new products, new market segments and new business models. How do companies keep pace with rapidly evolving market needs, stay ahead of the curve and create value through breakthrough innovation? If you look at examples of hyper-growth tech companies like Apple and Amazon, open innovation and co-creation is one of the core operating models to keep them agile in a hyper competitive space.

So, what is open innovation? Professor Henry Chesbrough at the Haas School of Business at the University of California, Berkeley in his book on “Open innovation” describes “Open innovation as a paradigm that assumes that firms can and should use external ideas as well as internal ideas, and internal and external paths to market, as the firms look to advance their technology.”

Many other global companies outside the tech industry like GE, LEGO, Coca-Cola, NASA, Johnson & Johnson have implemented open innovation models to fuel their future growth.

GE’s commitment to open innovation is clearly articulated in their open innovation manifesto (http://www.ge.com/about-us/openinnovation) – “We believe openness leads to inventiveness and usefulness. We also believe that it’s impossible for any organization to have all the best ideas, and we strive to collaborate with experts and entrepreneurs everywhere who share our passion to solve some of the world’s most pressing issues”.

Open innovation is based on a very simple tenet that ideas can come from anywhere: suppliers in the current value chain, start-ups, entrepreneurs, end users/consumers, academia; key question is how do you organize yourself to capitalize on these opportunities and create value?

One example of open innovation is how LEGO transformed their business by co-creating with consumers, as described in the book “Brick By Brick” by David Roberstson. LEGO invites their highly involved and skilled users to co-create new ideas / designs through an online portal (https://ideas.lego.com/). In this online portal, LEGO consumers can design either using LEGO bricks or computer 3D applications. Other users get to vote on these designs, once the idea reaches a targeted vote, LEGO can consider it as a new product by giving a small part of the revenues to the creator of the set. This model of co-creation motivates customers to constantly create new innovation and fosters a sense of entrepreneurial creativity.

Coca Cola participates in similar co-creation on new flavors through the Freestyle dispenser machine that allows users from around the world to mix their own flavors and suggest a new flavor for Coca-Cola products. The new product records the consumer flavor so they can get it from other Freestyle machines located around the world using the Coca-Cola mobile application. This model of open innovation puts the consumers at the heart of the product development process by using these suggested flavors as external ideas that are evaluated as a new product line.

Eric Von Hippel in his book “Democratizing Innovation” describes co-creation by highly sophisticated sub-group of end users he calls “lead users” to innovate for large firms. He argues that with advances in computer and communications technology, users will continue to develop new products in the future. Van Hippel’s many examples of user innovation in action range from surgical equipment to surfboards to apps to software security features. It makes sense for companies to co-create with a community of lead users.

While organizations can participate in the idea of open innovation, to be successful in drawing value from open innovation it is very important to have the right organizational structure & culture. How do we create value by harmonizing– internal and external ecosystem to select the best science, creating global execution & speed to market? This is not easy for most companies as it requires a shift in culture, mindset, and it takes time, focus and commitment from senior leaders to adopt and influence change. Open innovation operating models should be viewed as a journey driven by strategic vision; one cannot expect full success in the short-term. It is a long-term strategic commitment to where organizations have to evolve, iterate, fine tune over and over again; quick wins always help instill confidence and engagement in the organization. Simply coming across a great new idea is not enough, in order to maximize, translate and capitalize on a great idea you need the organization to be ready and have the mindset to quickly act and leverage the idea. You need internal R&D and marketing expertise to screen many ideas and transform that one great idea into value propositions to create life changing opportunities. You need the right mix of skills internally evaluating these opportunities – openness to new ideas balanced with the rigor in due diligence.

Another important aspect of organizational cultural for an open innovation model is cultivating a culture of risk-taking and embracing a culture of failure. Since transformational ideas are by definition high risk in nature, it is important for leadership to reward risk taking and nurture a culture of fast failure.

In order to fully maximize open innovation we have to look beyond just product-based innovation and look to full spectrum innovation – identifying the sweet spot between consumer needs, new science and new business models.

Terwiesch and Ulrich in their book “Innovation Tournaments” describe a systematic approach to producing and choosing high potential innovations by designing innovation tournaments (internal/external), pitting competing opportunities against one another and then consistently filtering out the weakest ones until those with highest potential remain. In 2016, Johnson & Johnson Innovation and Janssen announced $1.5 Million in Grants for World Without Disease QuickFire Challenge. Johnson & Johnson Innovation and Janssen selected the 3 companies (RMIT, Glyscend and Neurotrackeach receiving a grant of $500,000) from over 470 global applicants with solutions across the pharmaceutical, medical device and consumer sectors.

Johnson & Johnson Consumer Inc. has embraced this model to co-create with the world to accelerate new consumer solutions. We believe that a great idea can come from anywhere. We also know that we have unmatched scientific, R&D and marketing expertise to transform great ideas. Through the utilization of a collaborative approach, we have seen many great opportunities to create meaningful innovations that impact the lives of people.

Our strong external innovation ecosystem helps to supplement our organic innovation capabilities through value-creating partnerships. Working together with academic centers, entrepreneurs and emerging companies, we help advance breakthrough healthcare solutions and bring them to the people who need them most.

By synthesizing the strengths of external experts across complimentary areas and categories they are able to (1) Discover solutions across the globe at start-ups, universities, suppliers and companies, (2) Design solutions to fit consumer needs, strong business model and disruptive technology, (3) De-risk solutions by iterating, rapid prototyping and market experiments, and (4) Deliver solutions in accelerated way to our consumers.

To date, Johnson and Johnson Consumer Inc. has over 20 collaborations in place with start-ups and universities including:

  • Rest Devices, Inc., the makers of the Mimo Baby to develop the first smart, personal baby sleep coach system.
  • HAX, a hardware accelerator in Shenzhen (China), to scout and accelerate promising start-ups in the Joint Consumer Health Device Accelerator Program.
  • S-Biomedic, a biotech start-up using cutting edge technology to produce live probiotic cosmetics aimed to modulate acne bacteria in order to cure and prevent acne.
  • Xycrobe Therapeutics, a microbiome startup company that focuses on the development of treatments for inflammatory skin diseases. Xycrobe’s technology includes a host of bacterial strains that create a symbiotic relationship living on the skin to reduce skin inflammation associated with acne and eczema.

Acknowledgments: The authors want to thank Ying Jia, PhD for designing the cover for this blog.


Guest Author: Prithwiraj Maitra, Ph.D.

Prithwiraj Maitra, Ph.D.is currently Associate Director & Research Fellow, Head of Global Face Care Upstream Innovation Platform at Johnson and Johnson Research and Development located in Skillman NJ. Dr Maitra is responsible for delivering balanced innovation portfolio with focus on key strategic priorities & consumer unmet needs on Anti-aging, Acne, Fairness & Tone benefit areas & develop robust innovation pipeline for JNJ’s global beauty brands- Neutrogena, Aveeno, RoC, Clean & Clear, Neostrata. Key responsibilities also include developing a culture of innovation, nurture & inspire talent to develop future R&D leaders. Prior to joining Johnson and Johnson in 2009 Dr. Maitra held several positions of increasing responsibilities at Avon’s Global R&D center in Suffern, New York where he was responsible for technology scouting and driving upstream innovation for color cosmetics and skin care. Prithwiraj received his Ph.D. in Polymer Chemistry from Temple University in 2003 and executive leadership certification on Innovation and Strategy from MIT Sloan School of Business in 2015. Prithwi is author of several peer reviewed publications and book chapters and is often invited speaker, chair at several national and international conferences. Prithwi is inventor on over 40 patents or patent applications.

Trees of Life – Sustainable Development and Biodiversity Protection

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When today our industry is sourcing a natural ingredient it has to consider doing it within a sustainable development framework. Sustainable development considers the economy, social equity and the environment as its main pillars. Also called “triple bottom line”, those pillars reminds us that business, society and the environment are connected, they influence each other, and should have the same value (1). The effect of a business on a community (society) and its natural environment is particularly evident in the development world where many of our “exotic” natural ingredients are coming from. The risk to source ingredients careless of a possible negative impact on the communities and their environment is present. The United Nations (UNCTAD) with its Biotrade Facilitation Program and more recently spin off organizations such as the Union of Ethical BioTrade (UEBT) have advocated and implemented programs to protect the environment and its biodiversity (2). These organizations have helped initially to build supply chains with local producers working in a sustainable environment and eventually to connect with ingredient suppliers and finished product companies (both in the food and the cosmetic industry) committed to source ingredients sustainably. In Africa, organizations, producers and traders work with communities to sustain ingredient sourcing by preserving the biodiversity of the natural environment where the ingredient is coming from. Like the example of African trees (often call the trees of life) that are at risk of extinction due to increasing deforestation implemented by corporations in search of land to grow monocultures to feed an expanding worldwide population. Entire forests have been cut down with this objective. Some examples of trees that are at risk and that are currently saved by businesses integrating sustainable development follow.

Baobab
The Baobab tree standing alone in the middle of a savanna is a powerful and a beautiful image, but it also reminds us that that savanna was a forest of baobab trees and the tree we see is what is left. A recent commercial interest by the cosmetic industry in the Baobab fruit and oil has motivated suppliers to work with NGOs, traders, and local communities to make sure the baobab fruit is sustainable developed and so the tree is protected. Baobab oil is becoming popular as a treatment for dry hair, but it is also present in soothing and healing products due to its high content in phytosterols. Moreover, the fruit pulp is particularly rich in Vitamin C. In order to guarantee sustainability, the Baobab tree itself need to be protected and more baobab tree need to be planted. There is an incentive for a community to not cut the tree if the tree products can generate a business. Producers in Malawi agreed with local communities to protect the trees in order to sustain the fruit business.

Marula 
The Marula tree is indigenous to the sub-Saharan region and it is in danger of deforestation. Marula oil is extracted from the kernel. Its composition is very similar to olive oil (high amount of oleic acid) and it is very stable (high in VIt E). For this reason the oil is enjoying a commercial success. To protect the tree, organizations such as The Seed Initiative have worked with local communities and local traders to incentivize the planting of new trees in order to sustain the Marula oil growing demand (3).

Moringa 
The Moringa tree grows in many regions of Africa. The oil high amount of oleic acid and sterols sustains regenerative and soothing properties, while the presence of polyphenols contributes antioxidant characteristics. The presence of behenic acid, unique for this oil, add to the skin feeling. Also, in this case the commercial success of the oil has been an incentive for programs toward tree plantation. Local traders in Rwanda are working with communities to replant Moringa trees.

Final Remarks 
Our industry needs to work with local producers that sustain communities and their environment. It is our duty as citizen of this planet to preserve for us and the generations to come the planet biodiversity and its fruits. We need to source ingredients in a sustainable way and help protect the trees of life.

References

  1. J. Elkington. Cannibals with Forks: The Triple Bottom Line of 21st Century Business, New Society Publishers: Gabriola Island, BC, Canada (1998).
  2. http://ethicalbiotrade.org/
  3. https://www.seed.uno/The author wishes to thank Elisabeth Goyvaerts at Everpix for the cover picture (Marula forest, South Africa)

Guest Author: Giorgio Dell’Acqua, PhD

Giorgio Dell’Acqua, PhD, has been an investigator in applied biomedical research for 15 years and he has spent the last 16 years as an executive and cosmetic scientist in the personal care industry. He is specialized in skin and hair care ingredients, finished product development and technical marketing. He has covered multiple roles as a manager and director in different companies specialized in active ingredients and product development. He has helped bring more than 100 successful active ingredients and finished products to market and has authored more than 50 publications in medicine and cosmetic science. In the last 10 years he has been writing and lecturing on sustainability and cosmetic ingredients and helped sourcing, developing and bringing to market many sustainable ingredients. He is a recent award winning speaker on sustainability and natural ingredients and a regular columnist on sustainable cosmetic science.

Seaweeds – Cosmetic Applications

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The ocean bioflora is rich in plants producing molecules essential for their survival that can be useful to protect our skin.

Seaweeds are an amazing source of natural molecules for both nutrition and topical use. They are rich sources of minerals (including the essential micronutrient iodine), bioactive polysaccharides, carotenoids and even proteins, along with a small content of healthy lipids. They have been described as ‘an ideal food’.

Seaweeds are rich in phenols derivatives and polysaccharides with protecting activity (Ref 1, 2) For example, marine polyphloroglucinols, found in brown seaweed, are phenols derivatives with powerful antioxidant properties and significant activity against the damaging free radicals (Ref 3). Brown seaweeds also contain a slippery compound called fucoidan that assists with protection from marine pathogens. Fucoidan is a fucose-rich polysaccharide with anti -viral, immune modulating and matrix metalloprotease inhibiting properties (Ref 4).

Sea-harvested brown algae are known to have skin benefits and previously have been associated with an increase in skin elasticity (Ref 5). However, it is still difficult to formulate seaweed extracts due to color, scent, incompatibility. Research has moved into isolating the main components from seaweeds, allowing the formulator to use smaller concentrations of the extract. These lower levels reduce the risk of incompatibilities and material setting, color issues and scent, improving overall stability (Ref 6).

Seaweed components such as polysaccharides and phenols derivatives have proven to bring skin soothing and anti-aging properties when tested topically in clinical trials (Ref 7) and are promising ingredients to develop effective skin care products.

  1. Fernando IP, Kim M, Son KT, Jeong Y, Jeon YJ. Antioxidant Activity of Marine Algal Polyphenolic Compounds: A Mechanistic Approach. J Med Food 19(7):615-28, 2016
  2. de Jesus Raposo MF, de Morais AM, de Morais RM. Marine polysaccharides from algae with potential biomedical applications. Mar Drugs 13(5):2967-3028, 2015
  3. Singh IP, Bharate SB. Phloroglucinol compounds of natural origin. Nat Prod Rep 2006, 23, 558–591
  4. Fitton JH, Stringer DN, Karpiniec SS.Therapies from Fucoidan: An Update. Mar Drugs. 2015 Sep 16;13(9):5920-46.
  5. Fujimura, K Tsukahara, S Moriwaki, T Kitahara, T Sano and Y Takema, Treatment of human skin with an extract of Fucus vesiculosus changes its thickness and mechanical properties, J Cosmet Sci 53 1–9 (2002)
  6. Dell’Acqua G. Sustainable Ingredient Science: Brown Algae. Cosmet Toil 128(4): 226-229, 2013
  7. Fitton JH, Dell’Acqua G, Gardiner VA, Karpiniec SK, Stringer DN, Davis E. Topical Benefits of Two Fucoidan-Rich Extracts from Marine Macroalgae. Cosmetics 2(2): 66-81, 2015

The author wishes to thank Dr Helen Fitton, marine scientist, for contributing to this blog. The cover is courtesy of Ian Wallace.


Guest Author: Giorgio Dell’Acqua, PhD

Giorgio Dell’Acqua, PhD, has been an investigator in applied biomedical research for 15 years and he has spent the last 16 years as an executive and cosmetic scientist in the personal care industry. He is specialized in skin and hair care ingredients, finished product development and technical marketing. He has covered multiple roles as a manager and director in different companies specialized in active ingredients and product development. He has helped bring more than 100 successful active ingredients and finished products to market and has authored more than 50 publications in medicine and cosmetic science. In the last 10 years he has been writing and lecturing on sustainability and cosmetic ingredients and helped sourcing, developing and bringing to market many sustainable ingredients. He is a recent award winning speaker on sustainability and natural ingredients and a regular columnist on sustainable cosmetic science.

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