Acne, the Billion Dollar Business Analyzed

It’s inherent that acne products, and all economy, stems from the desire for money. The effect on the consumers health comes secondary to this fact.

Acne is a business, and business is flourishing.

There are thousands upon thousands of acne products, both prescription and over the counter, that cycle in and out of drugstore shelves. At any given time, there are hundreds of different products that are available to the acne sufferer. They all have similar formulas with the same major ingredients. There are only a few active ingredients ‘shown in studies’ to be effective in ‘managing’ acne – those are Benzoyl Peroxide and Salicylic acid.  In essence, mostly all OTC acne products are the same thing with a few different inactive ingredients.  Figuring out which one is best is overwhelming for the common acne sufferer. The fact is,  none of them are effective at curing your acne.

Greed, misconception, and its relationship with acne

To understand the acne business model, you must first understand that humans are greedy, and greed in the ecosystem of today’s society directly effects health in many ways.

Earth provides enough to satisfy every man’s need, but not every man’s greed. – Mahatma Gandhi

In a system where people are rewarded through the accumulation of money, the health of the unsuspecting results. Enron is a classic example of humans greed to accumulate money at the expense of others.  The healthcare and pharmaceutical industries are no different.

Every year, a dozen new acne companies are created. According to the American Acadaemy of Dermatology, 40-50 million people suffer from acne. and each year 85% of teenagers will have acne. [1] This creates a huge market with lots of opportunities for business men to make money.

Common sense will tell us that most of these business men don’t understand the true nature of acne – hell, most dermatologists don’t even understand it’s true nature. Their beliefs are based off of misconception.

The #1 Misconception: Acne is not curable, but treatable and manageable.

This is because the roots from which all acne treatments stems from is an effort in futility. All acne products treat the symptom (acne) and do not treat the true cause (health and nutrition). [3] (see Ladder of Causes)

The fact that the acne market today is based off an effort in futility happens to be very good for business. Understand the cycle of events that take place in an average acne sufferer consumer:

Big acne business and the many unknowns

The pinnacle of business in terms of the acne product market came at the advent of  ProActiv, a sister company of Gunthy Renker Corporation, a direct-response marketer known primarily for selling products in the United States via infomercials. [4]

Right now, we own acne. – Greg Renker, a chief executive of Guthy-Renker

The idea was quite genius, in business terms. Bring together the marketing powerhouse abilities of Gunthy Renker with the preconceived expertise of Dr. Katie P. Rodan and Dr. Kathy A. Fields, the two dermatologists who founded ProActiv. Now you have an image with the capability to market it effectively. From this point, there is no need to put more money into improving product effectiveness.

We are told very little about how these two dermatologists created their products. The FDA will tell us that topical products should be built and tested in a lab by capable human beings  doing their due diligence, who understand the function of each and every chemical used. Where is the line between dermatologist and chemist drawn? Bottom line, it isn’t – the consumer has no idea how these products were created and who they were created by. How are we able to surmise the effectiveness of a product we cannot understand completely? Are we to blatantly believe what we see on television infomercials and obliviously consume and apply drugs that are supposedly helpful for us?

Built in Consumer Advertising vs. Commercial Advertising

In most business models, built in consumer advertising is a huge part of the success of an advertising campaign. For instance, when someone buys a Honda Civic, and is happy with their purchase, they will tell their friends and family that they are having a good experience. Another example would be Apple. When someone is on the bus using their new iPhone, the apple logo stands out on the other side. Someone else who randomly looks sees this logo and is effectively advertised by the consumer.

The acne business model is inherently different. When someone is able to effectively improve their acne, it isn’t common for the sufferer to tell his friends and family that ‘Hey, this Murad acne cream is working pretty well!’ No one can see what type of acne medication/treatment you are using at the time. Acne is a sensitive subject that isn’t talked about publicly. Therefore, built in consumer advertising is not an important cornerstone of the acne advertising model.

What’s far more important is commercial advertising. Getting the idea out there that the product they are selling actually works and convince the consumer that it is proven to work. Jessica Simpson was paid six figures alone to appear in Pro Activ commercials to help convince the consumer.  The company spends about $125 million a year buying time for its infomercials on channels like VH1 and MTV as well as Web sites like Facebook. [2]

Millions of dollars are put into lobbying the government and FDA for approval of acne products.

The money doesn’t end in advertising. Most over the counter products and all prescription products must go through the FDA if companies want to access this multi-billion dollar industry. The FDA, or Food and Drug Administration, is a federal agency in the Department of Health and Human Services established to regulate the release of new foods and health-related products. [5]

Wherever there is a billion dollar industry, there will be corruption. The acne market is no different. Every year, health care, pharmaceutical, and cosmetic companies alike put millions of dollars into lobbying the government for ‘ease of passage.’ This means, making the flow from lab to drugstore shelf as seamless and easy as possible. Despite the obvious fact that this goes against the very reason why the FDA exists in the first place, it just goes to show how important money is in the overall scheme of things as compared to the actual effectiveness of the product and whether it helps people or not.

Drawing conclusions from the fundamental concepts of the acne business model

ABM Concept #1: Acne is not curable, create products that succeed in managing acne as a disease.

The whole acne product scam is based off the misconception that acne is not curable but only manageable, yet they want to give the impression that there is a possibility of a cure with their products. The fact is, there is a cure for acne, and that is through health and nutrition, which is devoid of any need for any specific acne treatments.

ABM Concept # 2: Money spent on commercial advertising is much more important then drug effectiveness.

As stated earlier, commercial advertising yields far higher returns then would be product effectiveness, because built in consumer advertising does not exist with the acne business model.

ABM Concept #3: Health of sufferers comes secondary to product effectiveness and profit margins. The FDA is more of an obstacle then a safety.

Understand that acne drugs, whether it be Accutane, or topical acne treatments, are not healthy and can severely impair your health in many cases. This doesn’t matter to acne companies, as long as the product passes FDA regulations and the superficial symptoms are treated. This falls within the business model because acne sufferers are so desperate at fixing their skin that they are blinded by the ramifications of consuming man made drugs and applying man made topicals made from unnatural chemicals.

Understanding the greed and business model of acne products on the market today can open your eyes to many things. Be wary of any acne products or drugs on the market because they were not created with your health in mind.

References:

[1] http://www.aad.org/public/publications/pamphlets/common_acne.html
[2] http://www.nytimes.com/2007/10/18/fashion/18skin.html
[3] http://focusacne.com/ladder-of-causes/
[4] http://en.wikipedia.org/wiki/Guthy-Renker
[5] http://wordnet.princeton.edu/