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Steady Growth, Demand for Innovation Lure Competitors to Specialty Actives Market

(press release from Kline & Company)

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LITTLE FALLS, N.J., Oct. 13 -- As consumer demand continues to grow for personal care products that help stave off the ravages of time, product innovations are supporting double-digit growth for the active ingredients that fulfill claims of anti-aging effects, particularly in facial treatments. A newly proposed study from Kline & Company will explore a market that continues to develop, drawing new competitors into a complex and rapidly expanding marketplace.

"Consumers are coming to expect anti-aging benefits from even mass-market products, and this demand is creating a pull effect that is ultimately driving the market for new raw materials," says Gillian Morris, industry manager of the Chemicals and Materials practice for Kline's research division.

In order to make claims that their products can actually diminish signs of aging, marketers of personal care products are constantly looking for new combinations of specialty active ingredients--compounds that provide a demonstrable therapeutic effect on the skin or hair. These compounds include peptides; substantiated, branded botanical actives; and stabilized forms of vitamin C.

Thanks to these types of active ingredients and others, skin care products can now claim to repair the signs of aging and provide UV protection to retard further environmental damage. Hair care has evolved from simple cleansing, styling, and coloring products to more naturally derived products that are color- or texture-specific and extend color life. And even oral care products are using an anti-aging positioning to tout whitening benefits.

Delivery systems for specialty actives are also becoming increasingly sophisticated in order to impart the benefits of more powerful ingredients with controlled release and reduced irritancy.

"While consumers are starting to view anti-aging benefits as less of a specialty category and more of a basic product feature, they're still willing to pay more for products that incorporate these features," says Morris.

According to preliminary research for Kline's upcoming study, SPECIALTY ACTIVES AND ACTIVE DELIVERY SYSTEMS FOR PERSONAL CARE: U.S. AND WESTERN EUROPE 2007, the dynamic global market for these materials reached $400 million in 2006.

Innovation is prevalent at all levels of the personal care market, from professional products like Kline Becker's StriVectin-SD and prestige brands such as Estee Lauder Perfectionist Power to mass-market brands such as Procter & Gamble's Olay Regenerist. The nutricosmetic, cosmeceutical, and nutraceutical market segments are also introducing innovations that are driving the demand for new raw materials.

Growth rates for both the finished products and the specialty raw materials that are used to create them are not expected to slow in the short term as companies continue to enter the market both organically and though acquisitions.

"A lot of companies are looking at entering this small but fast-growing market segment in part because pharmaceutical technology can be rapidly adapted to this market, and companies are able to more immediately recoup their research costs," says Eric Vogelsberg, senior vice president and head of Kline's Chemicals & Materials consulting practice. "The industry is able to take advantage of demographic trends, there are relatively low barriers to entry, and attractive profit margins."

In order to investigate trends and opportunities among these specialty firms, Kline & Company is planning to undertake a new market research study, titled SPECIALTY ACTIVES AND ACTIVE DELIVERY SYSTEMS FOR PERSONAL CARE: U.S. AND WESTERN EUROPE 2007. The study will estimate the current and forecast size of the U.S. and Western European markets for specialty actives and active delivery systems, predict demand growth drivers, and evaluate opportunities for strategic alliances, technology licensing, and acquisitions.

For more information about this study, go to www.klinegroup.com or contact Gillian Morris at +1-973-435- 3432 or gillian_morris@klinegroup.com. In Europe, contact Erin Durham at +39- 0331-931807 or erin_durham@klinegroup.com.

For more information on Kline's studies on finished products in the personal care sector, go to www.klinegroup.com/market-research/research_consumer.asp or contact Carrie Mellage at +1-973-435-3412 or carrie_mellage@klinegroup.com.

To learn more about Kline's customized consulting capabilities for the specialty and fine chemicals industry, contact Eric Vogelsberg at +1-973-435- 3466 or eric_vogelsberg@klinegroup.com.

Established in 1959, Kline & Company (www.klinegroup.com) is an international management consulting and market research firm serving clients worldwide in the specialty chemicals, life sciences, consumer products, and energy industries.


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