I have been reviewing the Regulatory Impact Analysis report from the FDA regarding the proposed sunscreen monograph changes.
A quick refresh for those who are ill-informed (which given recent events appears to be many), the FDA has proposed that currently of all the currently available UV filters in USA, only zinc oxide and titanium dioxide meet the classification of being GRASE (generally recognized as safe and effective) and the remaining ingredients require manufacturers to submit safety data to classify them. There are also changes to the UVA & Broad Spectrum testing requirements - making them stricter, which are another bonus for us. Zinc Oxide fortunately is the superior choice for photostable UVA protection. Avobenzone is the chemical alternative for UVA protection, however requires Octocrylene in addition to attempt to counter its extremely poor photostability. If either of these chemicals are taken out by the FDA, it's as good as banning all of them.
Either way, the Impact Analysis data provides some interesting insight into current market size and how much ANO can grow - regardless of chemicals being banned or not.
This is calculated from combined information from FDA drug registration and listing data with Information Resources, Incorporated retail sales scanner data, Euromonitor sales data, and other sources.
Number of Branded and Private Label Formulations, Products, Product Lines, Brands, Manufacturers, and Firms
Column 1
Column 2
Column 3
Column 4
Column 5
1
Branded
Private Label Sample
Private Label Population
Total
2
Formulations
7,485
449
551
8,036
3
Products
3,563
420
515
4,078
4
Product Lines
1,129
48
59
1,118
5
Brands
741
25
31
772
6
Manufacturers
434
25
31
443
7
Firms
873
49
60
902
Most sunscreen formulations (of which there are 8,036 known to FDA) combine two or more of 8 active ingredients: avobenzone, homosalate, octocrylene, octinoxate, octisalate, oxybenzone, titanium dioxide, and zinc oxide. The most prevalent active ingredient on the market in terms of consumption is avobenzone.
Excluding Zinc Oxide and Titanium Dioxide, according to the FDA, approximately 88 percent of sunscreen consumption comes from products containing at least one of these active ingredients: avobenzone, homosalate, octocrylene, octinoxate, octisalate, oxybenzone.
As consumer sentiment (or Government regulation enforces) a shift towards natural, mineral based UV filters (zinc oxide - what we sell) the market size has potential to grow substantially as that 88% is up for grabs.
Number of Products and Annual Consumption by Active Ingredient
Column 1
Column 2
Column 3
1
Active Ingredient
# of Products
Estimated 2016 Consumption Volume (Tonnes)
2
Avobenzone
1,641
35,125 MT
3
Octisalate
1,791
33,625 MT
4
Octocrylene
1,432
33,935 MT
5
Homosalate
1,167
28,491 MT
6
Oxybenzone
1,342
25,883 MT
7
Octinoxate
1,940
12,474 MT
8
Titanium Dioxide
1,427
6,577 MT
9
Zinc Oxide
1,342
7,155 MT
Now, what is important to note here is that the typical volume of an ingredient per product varies quite a bit. This means that 35,125 MT of Avobenzone does not directly correlate to 35,125 MT of Zinc Oxide in replacement through product reformulation. In reality, if products currently using Avobenzone (max 3%) all switch to Zinc Oxide, they would likely use up to the max concentration of Zinc Oxide (25%) to achieve their UV performance, which means 8x more consumption volume.
FDA Allowed Maximum Concentration per Ingredient
Column 1
Column 2
1
Active Ingredient
Current Maximum Concentration
2
Avobenzone
3%
3
Octisalate
5%
4
Octocrylene
10%
5
Homosalate
15%
6
Oxybenzone
6%
7
Octinoxate
7.5%
8
Titanium Dioxide
25%
9
Zinc Oxide
25%
Based on this, that would be something like volume of 290,000 MT if the entire market of existing Avobenzone products switched to Zinc Oxide. Absolutely crazy.
Getting back to levels of sanity, ANO's forecasted growth from 292 MT in FY19 to over 1000 MT in FY20 does not seem unrealistic at all, in fact, seems rather conservative and just shows how much of a market there is out there. Even on existing volumes, our market share is still quite small, most likely with consecutive years of triple digit growth to come.
Remember, these are just USA figures. Not the world. Europe is estimated to be 4-5x the size of USA based on UV ingredient consumption and we are just getting started there.
(20min delay)