A dermatologist, left, teaches an FBC beauty consultant, center, about common skin conditions at Taipei Chang Gung Memorial Hospital. (Photo by Chen Mei-ling)

Local companies tap abundant biotech expertise to create innovative, cost-effective skin care products.

Beauty may only be skin deep, but a growing number of men and women are willing to splurge on products like cleansers, moisturizers, scrubs and wrinkle creams. “Once thought of as luxuries, skin care items are now considered necessities by many consumers amid improving living standards and greater social emphasis on physical appearance,” said Vicky Liu (劉依蓁‬), a project manager at the Biotechnology Industry Study Center under Taipei City-based think tank Taiwan Institute of Economic Research (TIER). “Rising demand for anti-aging and whitening products is creating massive business opportunities not only for traditional cosmetic manufacturers but also biotech companies.”

According to TIER, the value of Taiwan’s skin care market is estimated to reach NT$57.4 billion (US$1.9 billion) in 2020, up from NT$50.9 billion (US$1.7 billion) in 2015. Products with natural, organic and medical-grade ingredients are projected to carve out a larger share as consumers move away from standard cosmetics, Liu said, adding that local biotech companies are focusing R&D in these areas.

“Firms are eyeing collagen, herbal and hyaluronic acid-based goods,” she said. “Taiwan enterprises have a wealth of experience in developing active ingredients and botanical extracts, and such skills will serve them well in devising attractive offerings for these blossoming market segments.”

An employee at the FBC Health Center introduces the company’s skin care products. (Photo by Chen Mei-ling)

In-House Knowledge

Soaring demand has drawn some of Taiwan’s foremost enterprises to the skin care sector over the past decades. Among these industry entrants is Formosa Plastics Group, a conglomerate with businesses in fields spanning education, electronics, energy, health care and petrochemicals. In 2004, it established Taipei-headquartered Formosa Biomedical Technology Corp. (FBC) to explore various fields including cosmetics and health supplements. FBC’s two skin care brands, FORTE and DF, target the high-end and middle tier markets and are sold through local department stores and drugstore chains, respectively.

Stephen Liu (劉慧啟), senior vice president of FBC, said the company was able to make rapid progress in product development due to its parent group’s diverse technological know-how and wealth of academic and medical resources. It draws on fellow subsidiary Formosa Chemicals and Fibre Corp.’s nearly 50 years of experience in the R&D of surfactants, compounds used in all manner of cleaning and detergent formulations.

FBC also utilizes expertise at affiliated hospitals, working with dermatologists at Taipei Chang Gung Memorial Hospital on selecting cosmetic components and conducting clinical trials. In addition, the company’s beauty consultants are required to complete a training program in the Department of Dermatology before working with customers. “Our products emphasize quality and safety, and are designed to cater to the preferences and skin types of Asian consumers,” Liu said.

The biotech company has also teamed up with Chang Gung University’s Graduate Institute of Natural Products and Chang Gung University of Science and Technology’s Department of Cosmetic Science, both located in northern Taiwan’s Taoyuan City, on studies of traditional Chinese herbal medicines as well as extraction methods for collagen, hyaluronic acid and other natural substances. To boost brand awareness and consumer engagement, FBC has opened the doors of its production facility in central Taiwan’s Changhua County, offering a close-up look at its research activities and manufacturing. Visitors can take skin and scalp tests and make facial cleansers. Since its launch in mid-2017, the FBC Health Center has attracted more than 130,000 people.

“Viewing our processes and learning firsthand about our active ingredients offer a sense of assurance about product quality,” said Alex Chen (陳俊男), the center’s director. “Seeing is believing and I’m confident these educational efforts have played a role in our firm seizing a decent share of the highly competitive skin care market, which has long been dominated by foreign brands.”

State-owned Taiwan Sugar Corp. is a major player in the biotech sector owing to its extensive agricultural expertise and decades of experience in extraction and fermentation processes. (Photo by Chen Mei-ling)

Farm to Face

Another local corporate giant capturing a portion of the skin care market is state-owned Taiwan Sugar Corp. (Taisugar). The company was founded in 1946 after the end of Japanese colonial rule (1895-1945) to operate sugar mills previously controlled by Japanese firms. Since the 1980s, it has expanded into a host of industries including horticulture, livestock production and tourism. In 2004, Taisugar invested NT$1 billion (US$33.3 million) in establishing a biotech plant in southern Taiwan’s Chiayi County to produce dietary supplements and skin care products.

Sam Huang (黃民生), CEO of Taisugar’s Biotechnology Business Division, said core sugar processing technologies that the company has accumulated in such areas as extraction and fermentation facilitated its expansion into biotech. The firm’s extensive connections and expertise in Taiwan’s agricultural sector are similarly advantageous in terms of cultivating ingredients. “In contrast to the vast majority of cosmetic companies, which import raw materials, we strive to develop our own from scratch so we can be sure of their quality and safety,” Huang said. “We want to control every aspect of the product life cycle.”

According to the CEO, the collagen and placenta for Taisugar goods come from pigs raised on company farms. In addition, botanical inputs are largely sourced from its plantations of Amur grape, balloon flowers and orchids as well as propagation of gentian root through tissue culture. These raw materials are used to create skin creams and lotions for its Smooth and Stanlen brands. The goods are sold at supermarkets, through online retailers and on television shopping channels.

The company has placed much of its focus on developing brightening and whitening products owing to the local preference for a pale complexion. Other popular offerings include its all-in-one solutions purporting to reduce the appearance of lines, lighten age spots and tighten the skin.

Workers create cosmetics at Taisugar’s biotech plant in southern Taiwan’s Chiayi County. (Photo by Chen Mei-ling)

Tammy Tsai (蔡佳儒‬), manager of the Cosmetic Business Center in the biotechnology division, noted that price is a key factor in the appeal of Taisugar products. Compared to foreign options with similar formulas and ingredients, Taisugar’s are 30 to 40 percent cheaper. “This is due to our lower manufacturing costs resulting from in-house production of most ingredients,” she said.

Taisugar is also seeking to bolster its presence in regional markets by exporting its products and serving as a raw materials supplier for cosmetic-makers. Among related efforts, it is in talks with a Thai business group on sharing biotech expertise.

Regional Expansion

One of the region’s leading cosmetic and skin care enterprises is Taipei-based Chlitina Group. Established in 1989, it is the largest beauty salon operator in Asia, and the first to be publicly listed in Taiwan. The company sells own-brand products through its 300 franchises in Taiwan and nearly 4,000 across China.

Chlitina has been named one of the Best Taiwan Global Brands annually since 2015, and is the only beauty company included in the list. The survey highlighting the nation’s top 20 international brands is a joint effort by the Industrial Development Bureau under the Ministry of Economic Affairs, New York-based consultancy Interbrand and TIER.

Taipei City-based Chlitina Group sells own-brand products through its 300 beauty salon franchises in Taiwan and nearly 4,000 across China. (Photo by Chen Mei-ling)

According to Kao Shou-kang (高壽康), general manager of Chlitina Taiwan and Southeast Asia, the chain’s popularity owes much to founder Chen Wu-kang’s (陳武剛) pioneering use of amino acids in skin care treatments. Amino acids, the building blocks for proteins, stimulate collagen biosynthesis, hydrate skin and accelerate the healing process, Kao said, adding that the company has developed more than 140 kinds of professional body and facial treatments with antioxidant and whitening properties.

In addition to internal R&D, Chlitina carries out research projects in partnership with Chia Nan University of Pharmacy and Science in southern Taiwan’s Tainan City and the Biomedical Technology and Device Research Laboratories under the government-supported Industrial Technology Research Institute in the northern county of Hsinchu. Related initiatives span clinical trials as well as studies of plant extracts for skin whitening properties. And in 2015, it established a subsidiary in Paris to facilitate collaboration with France Lab, part of the Marie Claire Group, on product development.

Next on the expansion agenda for Chlitina is Southeast Asia. In January, the company opened its first branch in Vietnam and plans are in the works for outlets in Cambodia, Indonesia and Myanmar. “Young populations and emerging middle classes are fueling sales growth in ASEAN markets,” Kao said. “And health, beauty and wellness is one of the most popular spending categories among these groups.”

According to the general manager, efforts to boost commercial ties with the region are also in line with the New Southbound Policy (NSP). A key plank of the government’s national development strategy, the NSP seeks to deepen Taiwan’s agricultural, business, cultural, education, tourism and trade links with the 10 Association of Southeast Asian Nations member states, six South Asian countries, Australia and New Zealand.

“Owing to our technological know-how and extensive business development experience, I’m confident we can make successful inroads into emerging regional markets,” he said. “Eventually, we aim to gain a strong foothold worldwide.”