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Emollient, very thick substance derived from sheep. Lanolin has long been burdened with a reputation for being a sensitizing agent, which has always been a disappointment to formulators because lanolin is such an effective moisturizing ingredient.
A study in the British Journal of Dermatology concluded “that lanolin sensitization has remained at a relatively low and constant rate even in a high-risk population.” Based on a review of 24,449 patients who were tested with varying forms of lanolin, it turned out that “The mean annual rate of sensitivity was 1.7%”—and it was lower than that for a 50% concentration of lanolin. The amounts of lanolin used in products like facial and body moisturizers are much less than this, so the risk, if any, is negligible.
Lanolin is a very good ingredient for someone with dry skin, though it can be a problem for someone with oily or breakout-prone skin. Also, as an animal-derived ingredient, lanolin is sometimes viewed as less favorable in comparison to synthetic or plant-derived alternatives.
Reference for this information:
Dermatitis, March-April 2008, pages 63-72
British Journal of Dermatology, 2001, issue 1, 28-31
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