Pharmaceutical DNA in Kolmar Korea and COSMAX... True Commitment to R&D

[Korea Financial Times, Kim Nayoung] The global expansion of Korean cosmetics is accelerating rapidly. Last year, exports surpassed USD 10 billion, setting a new record. At the core of this K-beauty boom are the two major ODM leaders, Kolmar Korea and COSMAX. These two companies have evolved from nurturing small cosmetics brands to becoming global beauty manufacturing hubs. This article takes an in-depth look at their history and current status. <Editor's Note>


Kolmar Korea and COSMAX, which established the domestic beauty ODM (Original Design Manufacturing) system, have management styles that closely resemble pharmaceutical companies.
From adopting manufacturing and quality control standards in their production plants to allocating a portion of their revenue to research and development (R&D), their operational strategies are similar.

The reason lies in their founding backgrounds. Both companies were established by entrepreneurs with pharmaceutical industry experience. Kolmar Korea’s founder, Yoon Dong-Han, and COSMAX’s founder, Lee Kyung-Soo, were both former employees of Daewoong Pharmaceutical and were once colleagues at the company.

Chairman Yoon joined Daewoong Pharmaceutical in 1974 and rose to the position of Vice President before founding Kolmar Korea in 1990. Similarly, Chairman Lee worked at Daewoong Pharmaceutical from 1981 to 1992 before leaving to establish Korea Mirotto(now COSMAX).

Leveraging their pharmaceutical backgrounds, both founders applied pharmaceutical industry management principles to the domestic cosmetics sector. One of their key initiatives was implementing quality control standards in their manufacturing plants. In 1994, Kolmar Korea’s Sejong plant obtained cGMP (Current Good Manufacturing Practice) certification from the Ministry of Food and Drug Safety. COSMAX also received the same certification in 1998.

The practice of allocating a portion of annual revenue to R&D investment also reflects their pharmaceutical origins. Both companies invest approximately 5–7% of their annual revenue in R&D. It is no exaggeration to say that their ability to respond to rapidly changing market demands and lead the global market stems from these R&D investments.
Among the two, Kolmar Korea appears to be more committed to R&D. The company consistently spends over KRW 100 billion annually on R&D, which is nearly double COSMAX’s investment. Kolmar Korea’s R&D expenditure was KRW 104.1 billion in 2021 (7.0% of revenue), KRW 121.0 billion in 2022 (6.5%), and KRW 123.3 billion in 2023 (5.8%).

As of the third quarter of last year, Kolmar Korea’s cumulative R&D expenditure had already surpassed KRW 102.6 billion, exceeding KRW 100 billion well before the year’s end. This figure represents a 1,500% increase from KRW 7.4 billion in 2012 over just a decade. The company currently employs 281 R&D specialists, accounting for 30% of its total workforce.

In contrast, COSMAX allocates 5% of its domestic revenue to R&D. The company’s R&D investments amounted to KRW 47.6 billion in 2021, KRW 48.3 billion in 2022, KRW 54.2 billion in 2023, and KRW 68.6 billion in the third quarter of 2024. COSMAX employs a total of 1,150 researchers worldwide, comprising 25% of its workforce.

These R&D investments have translated into significant patent acquisitions.

Kolmar Korea has secured over 50 patents related to high-performance sun care, including innovative sunscreen technologies. In 2019, the company developed a technology that blocks ultraviolet rays, near-infrared radiation, and blue light. Furthermore, it has applied for patents under the multilateral patent treaty, securing simultaneous patent applications across 153 countries, including the U.S., Europe, and China.

COSMAX aggressively pursues patents across both skincare and color cosmetics. As of June last year, the company had filed approximately 1,500 patents and registered around 600 of them.

The second-generation leaders now at the helm are also incorporating pharmaceutical DNA into their business portfolios.

Yoon Sang-Hyun, Vice Chairman and CEO of Kolmar Holdings and the eldest son of Chairman Yoon Dong-Han, spearheaded the acquisition of CJ Healthcare (now HK inno.N). HK inno.N, a pharmaceutical company, has become another major cash cow for Kolmar Korea alongside its cosmetics division. In 2023, HK inno.N generated KRW 828.9 billion in revenue, contributing 38.5% of Kolmar Korea’s total revenue of KRW 2.1554 trillion.

Lee Byung-Man, CEO of COSMAX BTI and the eldest son of Chairman Lee Kyung-Soo, is strengthening the company’s health supplement sector through subsidiaries such as COSMAX NBT and COSMAX Bio. The group currently possesses 16 individually recognized raw materials, including hydrangea leaf and rosemary extracts.

Lee aims to increase this number to over 20 by 2026 and generate approximately KRW 300 billion of the projected KRW 500 billion in revenue from COSMAX-developed materials. Additionally, Cosmax Pharma is also a subsidiary of the group, engaged in the pharmaceutical business.

In his New Year’s address, CEO Lee reaffirmed his commitment to expanding the company’s health supplement competitiveness, stating, "This year will serve as a turning point in solidifying our dominance in the global health supplement ODM market and advancing our innovative business models."

Kim Nayoung, Korea Finacial Times (steaming@fntimes.com)