The news was a long time coming when the cosmetics company bought back 8% of its shares from Nestlé for €6.5 billion, and it hasn’t gone unnoticed that the candy maker took L’Oréal’s 50% stake in Swiss dermatology outfit Galderma.
This was because it is banking on full control to help the unit revive its performance, with company chairman Peter Brabeck-Letmathe stating that a standalone Galderma “gives us greater freedom because from time to time, it was rather restrictive.”
“By creating Nestlé Skin Health S.A. and by leveraging Galderma’s current portfolio, formulations and innovative research, Nestlé will now be able to provide science-based solutions for skin conditions.”
The new subsidiary joins Nestlé’s nutrition and health division, which reported the fastest growth among all divisions in the company, and Euromonitor Foods analyst, Ildiko Szalai, says this is good news for Nestlé.
Likewise, fellow analyst Oru Mohiuddin says “From Nestle’s point of view, there are benefits to diversifying and skin care has high margins and strong growth potential.”
However, Mohiuddin warns that because 2013 was not an easy year for Galderma, Nestlé will be preparing for the challenges ahead.
Broad platform
Galderma’s Scientific Division, with laboratories located in France, Sweden, United States, Japan and Switzerland, will become part of Nestlé Skin Health and will actively collaborate with Nestlé’s global R&D network.
“Nestlé Skin Health will have a broad commercial and R&D platform able to deliver state of the art solutions focused on maintaining, treating and restoring the health of the skin,” says Nestlé CEO Paul Bulcke.
“The new company will be particularly effective working across different trade channels to help people meet their skin health needs at a time when access to medical care is getting more challenging due to resource constraints.”
Nestlé Skin Health says it will have a full range of products for the skin, hair and nail including sunscreens, therapeutic skin care products, nutraceuticals, prescription drugs and medical devices.
The new unit will become operational as soon as regulatory requirements and competition authority clearance have been provided, with Humberto C. Antunes, who currently serves as President and CEO of Galderma, leading the way.