Cosmetics companies prove one of the lowest investors in R&D

By Simon Pitman

- Last updated on GMT

Related tags Personal care European union

A new study reveals that cosmetic and toiletry companies have one
of the lowest investments in research and development compared to
other global industries.

An annual study conducted by the European Commission shows that only the Media and Entertainments sector and Food Producers had a lower global spending level. Total investment for the Personal Care and Household sector came in at €3.646 billion.

This figures mean that the sector shares 1.2 per cent of the £295 billion total global spend, allowing an average annual investment of €243 million per company, putting it in 11th place out of the fifteen sectors.

The relatively low spend is in contrast to the high development costs required to ensure the safety and efficacy of cosmetic and personal care products, and emphasizes criticism that not enough is being done by the industry to comply with the goals set about by Reach, which aim to up safety standards.

The figures contrast sharply with the highest spender in the survey, which proved to be the automobile industry with a total investment of €58.5 billion, averaging €900 million per company. Indeed, German company DaimlerChrysler is the world's leading R&D investor.

Looking at the top 50 R&D spenders on a global basis, the figures accounted for only one European personal care company, L'Oreal. Currently the second largest personal care player in the world, it had a total investment of €507 million in 2004, a rise of 5.3 per cent on the previous year.

Next to this came Henkel with a yearly investment of €272 million, putting it in 61st place.

The overall figures for investment in R&D show that European industry still has the world's largest investment levels in research and development, with 18 European companies appearing in the global top 50. However, the European Commission also warns that investment levels between EU and non-EU countries continues to widen, giving rise to concern over future disparity.

This year's report compares 700 R&D investors with registered offices in the EU with the top 700 registered elsewhere. Together they invested €315 billion in R&D. This represents just over half of the total R&D investment by the private sector world-wide.

Overall the EU industry R&D investment increased by 0.7 per cent in euro terms. Once the two per cent Euro Zone inflation level is taken into account, this shows that R&D spend declined in real terms.

The figures contrast with those on a global level, where US player Proctor & Gamble, currently the second largest personal care player on the market, was the 38th biggest investor in R&D, with a spend of €1.326 billion.

Related topics Formulation & Science

Related news

Show more