Taiwan Today

Beauty—as the saying goes—is only skin deep. Still, a large and increasing number of modern-day women and men alike are sparing no expense to enhance their looks. The quest for beauty has thus created immense business opportunities not only for traditional cosmetics manufacturers, but also biotechnology companies that can apply the results of research in the biological and chemical sciences to offer more sophisticated, high-performance skin care products. Active enzymes, recombinant proteins and silicon polymers—these may all sound like components of a drug development strategy, but each actually represents an approach adopted by biotech companies attempting to cash in on the ubiquitous desire to look younger.

Biotech cosmetics are products containing ingredients extracted from animals, plants or microscopic organisms that have a biochemical effect on the skin. Similarly, cosmeceutical, a portmanteau of “cosmetic” and “pharmaceutical,” has become a marketing buzzword promoting cosmetic products that claim drug-like benefits and sell at a premium price. At the same time, in the field of biomedical research, the line between biomedical treatments and skin care cosmetics is being blurred by the day.

“Our scientific know-how has allowed us to develop, manufacture and market cosmeceutical products that are safe, effective and hypoallergenic. That’s why we’ve gained a share of the big, yet highly competitive skin care market both at home and abroad,” says Edward Chang, chairman of Maxigen Biotech Inc. “And our production facilities, which include medical-quality clean rooms, meet international standards in every aspect. They’ve secured internationally recognized quality management system certifications like ISO 9001 and ISO 13485.”

Maxigen has a strong research and development (R&D) team consisting of professionals formerly working at the Industrial Technology Research Institute (ITRI), the National Science Council and the Cabinet-level Department of Health (DOH). Chang has a doctorate degree in biochemistry from the University of Wisconsin-Madison and received postdoctoral training at Harvard Medical School. He once served as a faculty member of the New York University School of Medicine and Cold Spring Harbor Laboratory in New York.

Since its establishment in 1999, Maxigen has performed cutting-edge research on biopolymers and used them for new product development. After years of studies and collaboration with prestigious academic, medical and educational institutes in Taiwan including the ITRI, National Taiwan University Hospital, Chang Gung Memorial Hospital and National Central University, the biotech company has successfully created a proprietary line of collagen-based and hyaluronic acid-based products for medical, as well as cosmetic, applications.

Collagen, together with hyaluronic acid, is essential for the health of soft connective tissue. The former contains heparin sulfate, a major component affecting the suppleness of skin and muscle, while the latter hydrates the skin by holding in moisture and is generally credited in the industry as the “key to the fountain of youth.”

The collagen-based and hyaluronic acid-based products that Maxigen has developed through its patented technologies have been approved by the US Food and Drug Administration (FDA) and the European Union respectively. These two items have thus become Maxigen’s core technologies and competitive advantages.

Chang explains that his company’s main goal is to develop medical products, but these require great investments of time and resources due to the strict regulation of the industry, such as the requirement to conduct clinical trials to confirm safety and efficacy. Given these practical constraints, in recent years his company has sought to develop skin care products to sustain and grow its business.

According to Chang’s observations, anti-aging, anti-wrinkle and skin whitening products are the most sought-after items in Taiwan and throughout Asia. Accordingly, his company’s R&D focus and product offerings are geared to these preferences. So far, Maxigen has created some 150 skin care formulas for face and body containing natural, mild and bio-advanced ingredients that are easily absorbed and free from added preservatives.

The company now manufactures a broad range of skin care products in the form of creams, gels, lotions, serums and masks under its own brand names, Dr. Neo and BioFlash, as well as for domestic and international cosmetics companies on an original equipment manufacturing (OEM) and original design manufacturing (ODM) basis. It produces 8 million facial masks a year, taking up about one-tenth of the Taiwan market, and sells its various skin care products to OEM and ODM clients in the United States, Europe, the Middle East, Australia and the Asian region.

Chang adds that his company is among the few Taiwanese cosmetics manufacturers that have obtained good manufacturing practice (GMP) certification from the DOH. In 2001, Maxigen’s collagen-based biomaterials extracted from cows won the National Biotechnology and Medical Care Quality Award granted by the Institute for Biotechnology and Medicine Industry. The company was also the winner of the 14th SME Innovation Research Award granted by the Ministry of Economic Affaris in 2007.

In addition, Maxigen’s R&D capability and sales performance have lured NuVasive Inc., a NASDAQ-listed American medical device company, to acquire a 10 percent stake in the Taiwanese company.

According to Chang, Taiwan’s cosmetics market is worth more than NT$100 billion (US$3.1 billion) annually, with about 500 manufacturers jostling for a slice of the pie. “Skin care is no doubt a growing, promising industry given society’s increasing affluence and emphasis on personal appearance,” he says. “But, the industry needs to intensify its global presence to generate economies of scale and achieve a cost advantage and a good profit margin. That’ll help it stay afloat and remain competitive.”

Looking ahead, Chang says his company will promote its own branded products through active marketing and advertising campaigns, seek cooperation with internationally well-known cosmetics companies, and work to cultivate overseas markets including those in mainland China. Plus, Maxigen is scheduled to be listed on the Taiwan Stock Exchange in 2011.

Chao Chin-lung, deputy chief executive officer of the Biotechnology Business Division of Taiwan Sugar Corp. (TSC), says about a half of the domestic cosmetics market, or some NT$50 billion (US$1.6 billion), is occupied by skin care products for the face. His company is thus upbeat about the sector’s prospects and invested NT$1 billion (US$31 million) in 2003 to set up state-of-the-art facilities for its skin care products including precision processing and packaging equipment and pollution control systems from Germany and Japan.

TSC is a state-run enterprise that was established in 1946, one year after the end of World War II and Japan’s withdrawal from Taiwan, to take over the sugar mills previously controlled by Japanese companies or individuals. Due to the substantial decline of the sugar business since the 1980s, the company has launched aggressive diversification schemes to venture into animal husbandry, biotechnology, horticulture and tourism, among others, to boost its overall operational scale and revenues.

Crossover Technology

Still, Chao emphasizes that TSC did not enter the cosmetics market purely because of its promising business opportunities. Rather, the core technologies that the firm has cultivated over the past several decades for processing sugar, including fermentation, biotransformation and extraction, have meant it is well positioned to expand into the field of biotechnology.

“We started to produce skin care products because there is such market demand for them and because we have the necessary manufacturing technologies. It’s one of our efforts to maximize our existing know-how to address present-day needs,” Chao explains. “Besides, most ingredients used in Taiwan’s biotech cosmetics are imported and the place of origin of some products is unclear. We’re striving to develop raw materials ourselves to ensure their safety.” He says that collagen, for instance, is usually extracted from cows, pigs or chickens. The use of such ingredients, however, is risky amid contamination from outbreaks of foot-and-mouth disease and mad cow disease.
Chao says the placenta and collagen that TSC produces is extracted from pigs that his company raises through its animal husbandry business unit, and that the whole breeding process follows government regulations such as prohibiting the use of antibiotics or other restricted drugs. The products are also certified by the Taiwan Agriculture and Food Traceability System launched by the Council of Agriculture. Consumers can thus be well assured of the safety of the ingredients that TSC has extracted from the livestock that it raises at its farms.

TSC’s established reputation comes from its long history and status as a state-run enterprise, Chao says, and this has facilitated the promotion of its skin care products in Taiwan. Moreover, being state-run means the company has a larger obligation to the general public to make sure its products are safe and effective. Accordingly, Chao says that his business unit exercises great caution throughout the whole product development cycle starting with the initial R&D activities of tissue culture and cell research in the laboratory, through to production, packaging and the final quality checks concerning toxicity and efficacy. The company’s processes and products have obtained ISO 9001, ISO 14001 and ISO 22000 certificates for quality, environmental protection and safety management practices, respectively.

Chao continues that, unlike their Western counterparts, many Taiwanese women avoid suntanning and prefer to keep their skin as white as possible, leading his organization to emphasize the development of skin whitening and brightening products. And to cope with the busy daily schedule of many modern women, the company has created multifunctional “all-in-one” solutions boasting the ability to repair skin damage from overexposure to the sun, reduce the appearance of lines and wrinkles, lighten age spots and tighten the skin.

So far, TSC has developed skin creams and essences based on its own extraction of biochemical ingredients including collagen, placenta and hyaluronic acid, as well as a variety of health supplements. The company’s skin care products are marketed under its own brand name, Stanlen, through the domestic television shopping channel and in cooperation with the banking sector, and have received a good response. For example, in 2009 Stanlen launched an all-in-one concentrated cream that sold about 200,000 bottles in its first year. Chao attributes the satisfactory sales performance to his firm’s good product quality and pricing in the range of NT$950–$1,800 (US$30–$56), as well as an effective marketing strategy targeting career women aged 35 and above.

From Salt to Skin Care

Taiyen Biotech Co. is another company that has jumped onto the cosmeceutical bandwagon. Similar to TSC, Taiyen has a long corporate history and strong financial resources. Established as a state-run enterprise in 1952 under the name of Taiwan Salt Works to take charge of the nation’s salt-making business, it was, however, privatized in 1995 and listed on the Taiwan Stock Exchange in 2003.

Hung Hsi-yao, chairman of Taiyen Biotech, says that US, European and Japanese brands have long dominated the cosmetics market in Taiwan. Now, the government is working to change this scenario by assisting with the development of the domestic biotech cosmetics industry through funding, training programs and technological support. Hung believes that these incentive policies will help domestic skin care producers to expand their market presence.

Taiyen turned its attention to the science of skin care in 2001 by initiating extensive R&D projects in the field. In 2002, the firm sought technology transfers from BioCore Medical Technologies Inc., the first US biotech company whose collagen-based wound dressings won approval from that country’s FDA. The Taiwanese company has since used BioCore’s medical-grade collagen manufacturing technology to produce biomedical materials and cosmetics products.

“We’re trying to use our biomedical research results to address the technical side of skin care because we believe that the application of higher-level science in skin care treatment will definitely raise the bar in terms of quality, safety and efficacy,” Hung says. “Besides, we want to increase consumer trust through technological advancement and innovation.”

In the field of biotechnology, Taiyen has invested in the study of probiotic bacteria and key technologies including microbial culturing, fermentation engineering, food science and the isolation and purification of enzymes for a number of health food products, as well as the development of its skin care line. Currently, the company has three biotech factories manufacturing skin care, health and personal hygiene products, in addition to its old production lines that churn out salt products and seasonings.

In 2002, Taiyen also created its own skin care brand name, Lu-Miel, targeting products for women through more than 150 franchises nationwide. The company took another step by launching three skin care products for men under the name La-Miel in 2009. “Our product development emphasizes beauty, health and anti-aging,” Hung says. “Hence, we’ve sought to combine biotechnology and marine biology, as well as different types of antioxidants, collagens, growth factors and natural extracts from Taiwan’s deep-sea algae and high-mountain plants to enhance skin texture, elasticity and brightness.”

Hung continues that Taiyen’s whitening and anti-aging products are its best sellers. He particularly recommends the company’s self-developed and patented whitening essence, Diamond Bright, which employs tranexamic acid, a-Arbutin, sodium ascorbyl phosphate and pine bark extract to lighten dark blemishes on the skin. The product won the National Biotechnology and Medical Care Quality Award in 2008.

Marketing Legend

When discussing the development of his company’s skin care business, Hung says the firm wants to expand its customer base from the previous target age of 40 and above to include women 35 and under. Accordingly, Taiyen has recently unveiled a new product line, Lu-Miel Legend, to appeal to younger women.

Echoing the thoughts of Maxigen’s Edward Chang, Hung says it is essential for domestic skin care product manufacturers to boost their production scale so as to offer goods at a competitive price and still enjoy reasonable profits. Nevertheless, to achieve economies of scale calls for significant market demand. In this regard, Taiyen hopes to widen its sales channels to include department stores, convenience stores and online shopping websites, together with building a higher media profile.

Hung cites tallies released by Euromonitor International, a global market research company, as showing that the international cosmetics market was estimated at some US$230 billion in 2009, and that Asia, in particular mainland China, is likely to emerge as the world’s biggest cosmetics market between 2011 and 2013.

In light of its huge market potential, Hung says his company will step up efforts this year to cultivate the mainland market given the similar culture and patterns of consumption it shares with Taiwan. Moreover, mainlanders generally show interest and trust in Taiwanese brands. He hopes that the two sides of the Taiwan Strait can seal the government’s proposed Economic Cooperation Framework Agreement soon to facilitate cross-strait trade exchanges.

“The incorporation of biotech in beauty ingredients has become a popular trend, as well as a good selling point. With superior quality and technological application, Taiwan-made biotech cosmetics stand a very good chance of gaining a share of the mainland market,” Hung says with confidence. “And the establishment of a market presence across the strait will help Taiwan’s biotech cosmetics sector grow and prosper and eventually secure a foothold in the international market.”

Write to Kelly Her at kelly@mail.gio.gov.tw