By and  on January 23, 2007

Procter & Gamble Co. jumped into the red-hot dermatological skin care business Monday by disclosing that it has acquired HDS Cosmetics Lab Inc., the marketer of Doctor's Derma­tologic Formula, or DDF, skin care.

The brand, which was founded in 1991 by New York dermatologist Howard Sobel and nutritional consultant Elaine Linker, was purchased from North Castle Partners, a private investment firm that bought HDS in April 2004. The terms of the sale to P&G were not disclosed.

Market sources estimated, however, that P&G paid $50 million to more than $90 million, based on three to four times the sales volume of DDF.

P&G was motivated by a desire to expand and extend its reach into the prestige beauty market. DDF, which is based in Yonkers, N.Y., will become part of the P&G Global Skincare division of the Cincinnati-based consumer products giant. Paolo deCesare, president of the skin care division, said the acquisition fits into the corporate vision of pursuing skin care as a key growth category. Speaking by phone from his office in Geneva, DeCesare described the move as plugging "the sweet spot" between the division's two existing treatment brands, the mass market giant Olay and the high-priced, high-octane SK-II.

"We are looking for opportunities to expand our portfolio to reach new consumers," he said, adding that the acquisition will sit comfortably between the two existing brands in terms of price point, distribution and consumer profile.

For instance, a DDF moisturizer ranges in price from $40 to $80, which is situated well above the drugstore-oriented Olay, but below SK-II, where a similar product retails for $80 and above. DeCesare talked about the "upside" opportunities for P&G in leveraging the large pool of knowledge it has gleaned from marketing skin care in the mass and upper markets, and pairing that experience with P&G's global reach. The company said it expects to infuse the brand with consumer-oriented product innovation. Add to that the new distribution channels and new consumers provided by DDF.

DeCesare pointed out the pioneering role of DDF in being one of the first brands founded by a well-known dermatologist, with a roster of celebrity clients. He said Sobel has provided "very fruitful cooperation" and has committed himself to a "smooth integration" with P&G. But DeCesare would not comment beyond that point.

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