Nestle invests more in skin care strategy with 10 research centers

(Reuters) - Nestle on Thursday will announce plans to open 10 skin care research centers worldwide, deepening its investment in a faster-growing market for healthcare products.

The logo of Nestle is seen on the company building in Mexico City, January 24, 2014. REUTERS/Edgard Garrido

The Swiss company, known globally for its chocolate bars, baby food and coffee, signaled a heightened interest in skin care earlier this year. It spent $5.7 billion for the rights to some injectable wrinkle treatments of Valeant Pharmaceuticals and for L’Oreal’s share of a dermatology joint venture the two operated.

Nestle is also spending about $350 million on dermatology research and development this year, said Humberto Antunes, chief executive of Nestle Skin Care.

The first of the new research hubs, dubbed Nestle Skin Health Investigation, Education and Longevity Development (SHIELD) centers, will open mid 2015 in New York, followed by Hong Kong and Sao Paolo, and later others in North America, Asia and Europe, Nestle said.

Antunes likened the centers to “a theme park” for scientists, academics and other experts in skin health.

“What we aspire to do is create an environment that is multi-disciplinary,” Antunes said. “We’re going to put (known technologies) together so that we can discover new approaches to caring for the health of people.”

Nestle knows skin health will be a growth market, “certainly faster growing and more profitable than packaged foods and drinks,” Kepler Cheuvreux analyst Jon Cox said. “But no one knows how it is really going to shape up.”

Nestle’s skin care push puts it into competition with big spending industry veterans such as Allergan, the maker of Botox anti-wrinkle treatments, and Johnson & Johnson, which sells Neutrogena products.

Long term, Nestle expects 40 percent of its skin care business to be prescription drugs, with the rest divided between over-the-counter products, such as sunscreens, and aesthetic lines, such as wrinkle treatments.

“The advantage of having a large company (Nestle) investing in this space is that they can dedicate funding into R&D and targeted therapies,” said Dr. Joshua Zeichner, assistant professor of dermatology at Mount Sinai Hospital in New York.

The initiative is being launched in partnership with the Global Coalition on Aging (GCOA), a consortium that includes companies such as Intel and Bank of America. The group will promote skin health needs for a global population expected to include more than 1 billion people over age 60 by 2020.

Nestle, which is funding the effort, declined to say how much money it will pump into SHIELD centers. It will claim any new products that come out of the initiative that fit within its areas of interest, while others may be turned over to other companies to develop.

Reporting by Bill Berkrot; Editing by Michele Gershberg and Steve Orlofsky