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At NeoStrata, the secret to success is to reinvest

Skin care company’s main goal is to get product to the public

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From left, Kathleen O’Hare Dwyer, vice president of sales and marketing at Neostrata, CEO Mark Steele and Leigh Ann Catlin, vice president of international business relations. The company employs about 75 in its Princeton office.
From left, Kathleen O’Hare Dwyer, vice president of sales and marketing at Neostrata, CEO Mark Steele and Leigh Ann Catlin, vice president of international business relations. The company employs about 75 in its Princeton office. - (AARON HOUSTON)

Early on in their 45-year partnership, Dr. Eugene Van Scott and Dr. Ruey Yu crafted scientific formulas that held huge potential for people suffering from problem dry skin, psoriasis, eczema and even wrinkles.

And back then, they just gave those formulas away — literally.

The dermatologists, widely recognized for discovering the anti-aging benefits of alpha hydroxy acids, published those formulas and encouraged pharmacists to whip up batches of their specialized creams for patients in need, no payment necessary.

As doctors, their goal was more altruistic than financial, Van Scott said: “If you discover it, it's worthless unless it's used.”

In time, however, they realized they could market their skin care discoveries and still remain true to their higher mission. In 1988, they formed their own company in Princeton called NeoStrata and started using that to manufacture and sell their products to the public. Any revenues are then used to fund more scientific research.

“That's really our mission at NeoStrata,” said Mark Steele, NeoStrata's CEO. “Their interest and mission is how do they solve these skin disease problems for people around the world.”

That laser focus on R&D is both a blessing and a curse for the company, which sells its NeoStrata brand through physicians and its Exuviance brand at retail chains such as Ulta.

More research makes for more effective products, but it doesn't leave a lot of money to spread the word, Steele said.

“There's frustration, I think a little bit, because the world doesn't fully know,” Steele said. “But there's a choice as a company: You can spend your money on R&D or you can spend your money on marketing. And (the doctors') passion has always been, truly, R&D.”

To that end, Yu and Van Scott — both well beyond retirement age — still head to the lab every day, and when they come up with something that could have broad commercial appeal, they task the company's researchers with bringing it to life.

The company usually introduces about 12 to 15 new products every year, and each labors through the R&D pipeline for about 18 to 24 months before it hits the shelves, said Lynn Murphy, R&D manager at NeoStrata.

And while the doctors fret over making products effective, the researchers and business developers at NeoStrata focus on making them feel and smell good, too, Murphy said.

That's critical in getting the product to as many customers as possible, Steele explained.

“Because we don't spend the money on marketing and advertising … it's so important that when someone tries our product, they like it and they want to use it,” he said.

And the doctors agree that puts the business in good hands.

“You have to sit and ponder and think and ponder and check and test, and if you're not going to do that, you're not going to do it, you're not going to make the discoveries,” Van Scott said.

“So it became clear that we weren't going to run a company and make discoveries at the same time. It was too damned interruptive of the discovery process.”

E-mail to: maryj@njbiz.com
On Twitter: @mjohns422

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