This week, I peel back the curtain on the boom in biotechnology in beauty by deciphering what the impacts could be, including sustainability and ingredient discovery.
Over the past 12 months, biotechnology has steadily become a major field of interest for the beauty industry, opening up the possibility for a paradigm shift in ingredient discovery and production.
The promise of biotechnology is vast, according to biotech firms active in the beauty space and the companies working with them. Biotech is the ability to manipulate organisms like algae and cells using engineering and other natural sciences, and the primary opportunities are around sustainability and ingredient discovery. But secondary benefits include ingredient scalability, creating new or causing obsolete product categories, and, ultimately, a new lens with which to comprehend the art-meets-science that defines the beauty industry. Big money is being poured into these young firms. In 2023, San Diego-based Debut received $34 million in a Series B funding round led by L’Oréal’s VC fund called Business Opportunities for L’Oréal Development (“BOLD”). And shortly after, the company earned another $6 million in Series B funding, also led by L’Oréal. Meanwhile, Boston-based Arcaea raised $78 million in Series A funding from a consortium of strategic and financial investors, including Chanel and Givaudan. There have also been acquisitions. Il Makiage and Spoiled Child parent company Oddity acquired Revela, a Boston-based beauty biotech lab, in April for $76 million.
Because the term “biotechnology” is a multidisciplinary field, it has broad applications and different approaches and thus has been used sporadically by the beauty industry for decades. However, the beauty industry historically relied on industrial chemistry as the primary form for both ingredient discovery and manufacturing. What has changed within biotech to make it more applicable to the beauty industry are the technological advances within the different approaches to ingredient discovery and scale. Instead of extracting ingredients through petrochemicals and plants, biotech promises to use microbes to produce ingredients, which makes it less resource intensive and, thereby, more sustainable and facilitates a rapid pace for ingredient discovery.
Moreover, biology-centric principles and research areas, like DNA and RNA sequencing, the microbiome, and bioinformatics, are slowly being applied to and translated for the beauty industry. The broader advancements in these research areas lend themselves to a trickle-down effect that emerges in consumer products.
“Biotech is a complete scientific shift,” said Anne Colonna, head of advanced research in L’Oréal R&I.
L’Oréal Group has been particularly bullish on biotechnology, as seen through its investments and partnerships. The way L’Oréal has opted to go about biotech is to enter into strategic partnerships, invest through its corporate venture fund BOLD, or “incubate” a startup, said Colonna. The latter involves helping to co-develop beauty applications for biotech companies, which still own their patents. L’Oréal Group has a strategic partnership with French biotech firm Microphyt, in which BOLD also acquired a minority stake in 2022. Microphyt produces microalgae on a large scale to develop other natural and renewable ingredients. Aside from Debut, L’Oréal China invested in Chinese biotech company Shinehigh Innovation this year, in September, through its investment company with support from BOLD. In June, L’Oréal partnered with the University of California Berkeley’s Bakar Labs, a biotech incubator, which offers the incubator access to L’Oréal’s Research and Innovation resources and expertise. The imperative that drives the company’s ambitions is its For the Future environmental commitment from 2020, which states that, by 2030, 95% of its ingredients used in formulas will be bio-based, derived from abundant minerals or circular processes.
“We need to keep innovating with high purity and high-quality ingredients while respecting nature,” said Colonna. “Biotech innovates on nature and works with nature on the full value chain of our ingredients, like the sourcing of the raw materials to the way we process it and scale up [production}.”
Colonna gave the example of Vitamin C, which naturally occurs in natural products like citrus fruits. It would require several dozen pieces of fruit to extract enough Vitamin C for a 10% Vitamin C solution for cosmetic use. Biotech can, therefore, replicate and produce more Vitamin C in a more cost-effective and environmentally friendly way than squeezing oranges. How the biotech works to replicate nature can vary. The hyaluronic acid in L’Oréal Paris’s Revitalift serum and the ceramides used by CeraVe are already created through biotechnology. Many stories have been written about how biotech can help with sustainability, but ultimately, that’s only one part of a larger picture.
“When [talking about] biotechnology, you’re not selling sustainability, you’re selling higher impact and higher quality ingredients,” said Joshua Britton, founder and CEO of Debut. “But the whole process is sustainable because it comes from the same roots of nature. Biotech has made a meteoric rise because the ESG metrics associated with the ingredients are super high.”
Debut develops its ingredients using cell-free fermentation, which don’t require cultivation, chemical synthesis or agrochemicals.
“The transition of the beauty industry has gone away from [asking] ‘What is biotech?’ to [asking] ‘How do we give rare and precious ingredients to our consumers and give ourselves a marketing edge?’” said Britton.
He pointed to L’Oréal Group’s Dermatological Beauty division, which includes SkinCeuticals and La Roche Posay. Its sales grew 27.3% year-over-year in the third quarter, according to earnings released in October, marking a growth significantly ahead of L’Oréal Group’s other three divisions. Beauty brands have always involved themselves in an arms race for the most innovative and effective products, beguiling customers to try the latest promised panacea for all their skin ailments. Biotech is a new addition that can push that arms race into hypergrowth. Consider this addition against the backdrop of The Ordinary or The Inkey List, which are dedicated to using decades-old ingredients. In June, The Ordinary launched its largest-ever out-of-home campaign, reinforcing the idea that heritage ingredients like retinol and copper peptides are well-understood, science-backed and more affordable than newer ingredients being pushed by competitors. A further fission could emerge between these approaches akin to competing Ancient Greek philosophers.
Biotech firms’ homegrown brands also support the new school of biotech thinking. When Oddity acquired Revela in 2023, the biotech firm already had four topical products for sale using a proprietary Fibroquin and ProCelinyl molecule. Those four products will be relaunched under the Spoiled Child and Il Makiage portfolios. Revela uses artificial intelligence for molecule discovery by uploading research data from human cell experiment results into an AI algorithm that endlessly tests cellular interactions with different molecules. And Debut will launch its first skin-care brand, Deinde, in January. It features a Debut-manufactured ingredient called Naringenin. Naringenin is a polyphenol found in citrus peels that helps combat aging-related inflammation. Following a skin-care category’s development, Debut plans to tackle fragrances. Britton said that an issue beauty companies have in creating fragrances is their chemical dependency and the limitations it presents in the mass production of some fragrance molecules. Biotech, meanwhile, promises to scale up otherwise scant productions of certain fragrance notes and molecules.
Fragrance is a ripe place for biotech to make an impact. The Arcaea-owned brand Future Society launched in October with six perfumes. Each was based on the sequenced DNA of extinct flowers and is meant to represent the ultimate harmony of science, nature and art. Arcaea uses DNA sequencing, biological engineering, and fermentation to create and scale new ingredients.
“Our company views biology as an entirely new, creative tool to do new things that we couldn’t do before,” said Jasmina Aganovic, CEO and founder of biotech firm Arcaea.
Future Society is sold on its DTC e-commerce site and Nordstrom.com. The brand is intended to establish and own biology as a genre in beauty, said Aganovic, creating only new ingredients with biotech rather than replacements for existing ones. Fragrance is the starting point for Future Society, which will then move into other product categories, gradually leveraging the story of biology and “unexpected earth elements” that are only possible thanks to biotech, she said.
Aganovic said biotech’s potential is not merely the creation of new ingredients and products but also the potential elimination of categories. One category she’s eyeing is deodorant because the microbes in the armpit could be engineered to not produce the same smells or reactions they usually do. But she readily states that, just because it is scientifically possible, consumers may not be ready for it.
“Our thesis is that novel [ingredient] performance and storytelling, which trace back to novel ingredient technologies, is the driver here. That’s our strategy for how we want to galvanize the industry around biology,” said Aganovic. “If [beauty companies] all make the same ingredients using different technologies, the industry will still look the same. But beauty is dynamic, and it’s always looking for the next thing.”
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