Formula rights in cosmetics: Why they are so important
In the cosmetics industry, formula rights play a crucial role in the development, protection and economic success of a product. Whoever owns the formulation rights not only controls production and marketing, but also secures a strategic advantage over the competition. In this article, we highlight the importance of formulation rights and the options for acquiring them. Only when you are the 100% owner of the formulation rights to a product can you create value for your company.
Formula rights – the most valuable asset in cosmetics
Every cosmetic formulation is based on a recipe – a specific combination of raw materials, active ingredients and technologies that determine the character of the product. Similar to the secret Coca-Cola recipe, which earns billions, exclusive recipe rights for cosmetic products can have enormous economic value. Whoever owns the recipe rights decides how the product is manufactured, whether it remains exclusive or can be used by third parties. In the cosmetics industry, recipe rights not only ensure the uniqueness of a brand, but also its long-term competitiveness.
Formula rights at Cosmacon – your choice, your product
We address the issue of formulation rights right from the start and offer four different formulation rights models to suit individual needs and investment budgets:
With ownership and formula rights
Following a tailor-made development process, you own 100% of the formulation.
You bear the development costs and secure full formulation rights.
Investment: 3,000 euros.
Ownership of formula rights based on sales volume
You manufacture your products with Cosmacon and, once a sales volume of 30,000 euros has been achieved for the product, the formulation rights are transferred to you at no additional cost.
Ownership of formula rights based on time
You manufacture your product with Cosmacon for at least 5 years and after this period, the recipe rights are transferred to you at no additional cost.
Without ownership and recipe rights
The recipe rights and the product remain the property of Cosmacon and can be marketed under other brands.
This flexibility allows companies to make optimal use of their resources and choose either exclusive control or a lower-risk solution, depending on their business model.
Formula rights – what you should look out for (!)
Of course, you will check the offers of many providers and always ask what a 100% transfer of the formula to your company costs.
Incidentally, a formula always contains the following information
1. Trade name of the raw material/active ingredient used
2. INCI designation of this raw material/active ingredient
3. Supplier and/or manufacturer
4. Percentage of the raw material/active ingredient
5. Recipe number
A recipe should always be in a protected PDF format and not in an easily editable Excel/Word format. If someone wants to ‘sell’ you a recipe in this format, they do not even have a LIMS system for documenting recipe and stability data. A safety report in line with the current Cosmetics Regulation is also excellent, provided that it contains the above points.
Recipe rights as a source of income
If you acquire the recipe rights as a private individual, you can license them to your own company and thus generate additional income.
Furthermore, in the event of insolvency, you do not lose everything, but still retain the recipe rights in your private ownership.
Conclusion: Why recipe rights are a decisive factor for success
The decision on recipe rights has a decisive influence on the success of a cosmetic product. Companies with their own recipe rights have full control over production, distribution and brand protection. Those who opt for a solution without their own recipe rights save development costs, but in the long term they relinquish control over the product.
Whether you are a start-up or an established brand, the right strategy for formulation rights can make the difference between a successful, unique product and an interchangeable standard formulation. That is why it is worth approaching this issue strategically from the outset.
For us, it’s a matter of course! If you have not received any information about formula rights from your service provider, you should be suspicious.
Please feel free to contact us if you would like to know more.