Why beauty brands are flocking to over-the-counter skincare

The latest trending skincare subcategory is over-the-counter.

Over-the-counter products, such as those for rosacea, psoriasis and eczema, are attracting more attention from non-traditional over-the-counter skincare brands. They now see an opportunity to innovate in a large category dominated by traditional brands like Eucerin, CeraVe and Aveeno. Prestige and masstige brands like Josie Maran, Inkey List, Bubble and lip care brand Eos have all expanded into the OTC space since 2020. OTC refers to non-prescription drugs, such as Tylenol and Benedryl, which contain a certain percentage of an active ingredient that targets a condition. In the case of some topicals for eczema, this is 1% colloidal oatmeal. Brands recently expanding into the category claim they have better, cleaner and more innovative formulations than existing treatments, even though the active ingredients tackling skin conditions are the same across the board. As the traditional beauty market becomes increasingly crowded, beauty brands are looking for new ways to increase sales without oversaturating existing product categories and assortments. According to research firm Insight Partners, the over-the-counter dermatology drug market is expected to grow from $15.5 billion in 2021 to $21.3 billion by 2028.

In September, Inkey List launched five OTC products in a new category called Supersolutions. The products, all under $25, focus on acne, eczema, psoriasis and rosacea. Supersolutions is sold online and in-store at Sephora, and on the Inkey List e-commerce site. A selling point marketed by the brand is that all products can easily be used with other skincare products and under makeup.

Mark Curry, co-founder and chief chemist of Inkey List, said the brand chose to develop supersolutions based on customer questions during consultations with AskInkey, a 24/7 chat service.

“Health companies [making OTC products] don’t necessarily think about other aspects of a consumer’s life that brands, like us, do,” Curry said. “We want to make sure that using treatment products is an experience that they understand and that is good. Whether it’s over-the-counter skincare or any skincare product, what matters is compliance, as people use it frequently and regularly. Curry said Inkey List expects Supersolution to soon represent 10-20% of the brand’s sales.

The resulting opportunities for Inkey List, in terms of product and sales opportunities, are significant. Inkey List may launch different ingredients and product formats as regulations change and may “unlock” other ingredients in the OTC space, Curry said. An example is when the Food and Drug Administration approved Differin Gel 0.1% for the treatment of over-the-counter acne in 2016. It was originally an approved prescription product for acne in 1996.

For its part, Codex Beauty was recently renamed Codex Labs Corporation as it seeks to focus more on over-the-counter skin conditions such as acne, eczema, psoriasis and rosacea. This decision emerged as the brand was conducting clinical trials on its acne products. Dr. Barb Paldu, Founder and CEO, said the brand was evolving into a dermatology brand. Its first OTC products, launching in March 2023, will focus on acne.

“When we looked at our [product launch] roadmap, we have seen that the next over-the-counter products will be for eczema, psoriasis and rosacea. It didn’t make sense to be called a beauty company anymore,” Paldus said. “We also obtained the seals [for our products] the National Psoriasis Foundation and the National Eczema Association; it’s our community now.

This community is vast and is an opportunity for brands to increase their results. According to the American Academy of Dermatology Association, 7.5 million people in the United States have psoriasis, while rosacea affects 16 million and 10% of people will develop eczema in their lifetime. Eczema affects up to 25% of children and around 3% of adults. First Aid Beauty, which developed products for eczema when it launched in 2009, was successfully sold to major conglomerate P&G. As more companies look to dermatology and clinical brands to grow their portfolios, this group of new OTC brands could be a viable target.

Meanwhile, Josie Maran created a collection called Argan Apothecary to house her OTC products. She launched her first product, a body butter for eczema, in 2022 for $46. A second undisclosed product originally slated for launch in August is pending and in development, but two new products will launch in 2023. So far, the OTC Body Butter has been a best-seller and has driven the acquisition of new customers for the brand, according to Josie Maran, founder and CEO of her eponymous brand. About 40% of customers who buy the body butter are new to JosieMaran.com, and it’s the #2 best-selling product on the brand’s e-commerce site. The body butter is also sold at Sephora, where it ranks in the top five best-selling Josie Maran products..

Maran said the Eczema Body Butter is based on the brand’s best-selling Whipped Argan Oil Body Butter, but with the added bonus of being for sensitive skin. Because of this association, educating clients has been relatively straightforward, she said.

“We have credibility in creating beautiful sensory formulas, so you don’t sacrifice a product’s beauty and flavor to achieve next-level results,” Maran said. “We fill a void that people want. People are now being educated about healthy and clean ingredients; [OTC] is the next frontier.

Eos, which has sold two OTC lip products since 2020, declined to share sales data related to its own OTC efforts. But the market opportunity for OTC lip products is vast, according to previous reports from Glossy. OTC products account for 40% of overall sales in the lip category and generate nearly $500 million in annual sales, said Soyoung Kang, chief marketing officer of Eos, citing Nielsen research.

To be clear, prestige brands catering to skin needs like rosacea and eczema have been around for many years and are sold by a variety of retailers like Sephora, Ulta Beauty, Bluemercury, and QVC. But the encroachment on this space by unfounded brands in the category is more recent, as is their focus on more innovative formulations. Examples include Maran’s clean beauty approach and Codex’s emphasis on plant-based and vegan formulas that support the microbiome.

“Brands are leaning into the category because the traditional beauty category is incredibly crowded,” Paldus said. “There is a greater barrier to entry to release an OTC product than there is to release a regular cosmetic product. Brands with strong technology seek to differentiate themselves and move into a space less noisy white. »

Codex has seen a 40% retention rate for products bearing the seal of the National Psoriasis Foundation and the National Eczema Association. Additionally, emails specifically targeted to people who came to the brand’s website from these entities have a 60% open rate, compared to 20% for the rest of Codex’s subscriber base. .

“There is an appreciation by the client with skin conditions [for our products] and a loyalty from people with these skin conditions that we’ve never seen in beauty,” Paldus said.

Dr. Rachael Cayce, MD, dermatologist and advisory board member for the Physician Formulas’ Physicians Coalition, says many over-the-counter products exist that treat one skin condition that can aggravate another condition. Rosacea patients, for example, can still have dry or oily skin, so they benefit from having many products to choose from that won’t be irritating, she said. However, she said she doesn’t see many additional benefits for people as the products become more available at specialty beauty retailers. She finds that the education needed to treat medical skin conditions is lacking.

Curry, meanwhile, sees a benefit in more specialty and high-profile retailers selling products focused on the condition of the skin. And Maran said she hopes to see more specific merchandising categories, so customers can more easily navigate and find those products.

“Most [this product category] can be found in parameters such as [Sephora]the more it normalizes [these skin conditions]”, Curry said. “Historically, people kept these products in locked drawers or in their bathroom cabinets. But the more you come across it in a high-prestige environment, the better.

With the added attention paid by the beauty industry to skin conditions such as eczema and psoriasis, other skin conditions such as hidradenitis suppurativa, a chronic inflammatory skin disease, may receive more attention. late, Cayce said. Estimates in the United States and Europe show that approximately one in 100 people has HS. Another skin condition could be seborrheic dermatitis, which can cause stubborn dandruff. Indeed, many hair care brands such as Jupiter, Living Proof, Headquarters and Ouai have already launched dandruff-focused products over the past two years, hot on the heels of historic brands Blue Selsun and Head & Shoulders.