As an industry that has multiplied in size by a factor of five over the last two decades, active ingredients remain the star performers in the overall ingredients market, which itself is one of the key growth areas for specialty chemical suppliers.
Looking back at the early 2000s, the US and European markets for the three leading actives categories (botanicals, proteins and peptides, and biotechnology products) collectively generated less than US$ 200 million. Sederma, the market leader during that time, was purchased by Croda for $66 million (which, compared to today’s multiples, looks like a very sweet deal!). Another key player, Laboratoires Serobiologiques, was acquired by Cognis in 1999. Other key market participants at that time included Arch (Brooks), Collaborative, Pentapharm, Active Organics, and Amerchol—all have been acquired. The market had just embarked on its switch from animal-sourced ingredients such as collagen or lanolin to botanicals. Matrixyl, launched in 2000, created a new segment—synthetic peptides, a tech-driven and highly substantiated active ingredients niche.
Fast forward to the 2020s, the actives market is over $1 billion in annual revenues, has enjoyed a double-digit CAGR over the last 20 years, and offers some of the best profit margins in the business. Botanicals, synthetic peptides, and biotech have been significant contributors to the market expansion. The supplier base has experienced intense M&A activity, with most of the prominent ingredient suppliers looking to add an attractive active supplier to their ingredient portfolios. Acquisitions reflected investments related to R&D and legal compliance, including spending to build claim substantiation for products. In sum, the supplier base is now vastly more consolidated.
While the personal care actives market has grown significantly mature, it is still very much the growth industry of the beauty industry. It remains the source of many opportunities as suppliers try to answer questions such as—what is the next big innovation? Are probiotics here to stay? Are neurocosmetics or skin microbiomes the claims of the future? What interesting acquisition targets are still on the market?
These questions are those the Kline team is looking to answer in its latest edition of Specialty Active Ingredients for Personal Care. This report is the industry’s respected and recognized leading source of market and competitive data (and more) and has been published multiple times since 2003. Kline is also a recognized leader as the management consultancy of choice in strategic planning, business planning, and acquisition support for the cosmetic ingredients industry.