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First, the production department at a company develops a product idea and it is sent to the R&D department. People from the R&D department figure out possible substances to be used in making the product. If there is already good safety data on record about the ingredients, then the final product can be produced and eventually sent to the market.

If the ingredients haven't been studied or used before for the company's particular goal, then safety testing needs to be done. A contract laboratory or sometimes the company's own will use cell cultures and chemical tests (in vitro studies) in order to determine if a substance could be toxic. If no issues are found the next step is to study the substance's effects on bacteria, microscopic lifeforms, plants or nonvertebrate animals (insects, crustaceans, worms, etc.) Only after all these safety tests are done the next step is to administer a small amount of the substance to vertebrate lab animals (usually a rat, mouse, fish or reptile) and make sure no potential harm is caused. Finally human patients who have given consent participate in trials of the experimental drug and researchers monitor their conditions. If all safety tests come back clear the company can then apply for a patent and permission from the government to release their product. (Remember the last three steps aren't generally done for cosmetics, only pharmaceuticals or medical procedures.)

Sources: Michigan Society for Medical Research & Answers.com

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