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Hair is produced from a skin structure called the hair follicle.
The root of the hair is located within the base of the bulb-like follicle. The follicle is very metabolically active producing hair shafts and is supplied with rich nutrients and growth factors through small blood vessels.
The hair follicle is closely associated with clusters of fat cells which seem to support the health of the follicle.
Baby hair begins to grow around the third month after conception within the womb of the mother.
Hair follicles develop as the fetus grows, producing downy hairs (vellus hair) several centimeters long when the baby is born.
After birth, vellus hair in the head is converted into the thicker, longer shafts of 'terminal hair" or what we consider normal of the head. During wound healing, the new skin cells appear to arise from the hair follicle.
Follicles can naturally switch back and forth from vellus hair to terminal hair.
This raises the possibility that the vellus hair of baldness could be reconverted back into terminal hair with the proper biochemical signals.
Few new hair follicles are made after birth but the skin contains undifferentiated stem cells that might also be transformed into new follicles with proper biochemical signals.

Hair follicles have specialized cells that have receptors for certain types of hormone messages, when the hormone binds to the cell, the cells respond to according to their innate genetic instructions.
However, some hair follicle cells are programmed differently than others in other parts of the body.
In men there are three basic types of hair follicles.
A hair follicle on the chin of a young man will begin to grow thick terminal hair as male sexual hormones increase at puberty.
A second type of follicle located on the man's scalp at the hairline is pre-programmed, when it receives the increase of male hormones at puberty, to start spending more time resting and less time growing thick new hairs.
This second type of follicle will contribute to a receding hair line, the stage of male pattern hair loss.
A third type of follicle, located on the back and the sides of same man's scalp, has a genetic program that is unaffected by the male hormone message after puberty.
This type of hair follicle continues its normal cycle of growth, rest, shedding the old hair, and then starting another cycle of growth. It will continue this cycle for many decades.
The innate genetic programming of hair follicle is the reason that hair restoration surgery works.
Hair restoration surgeons select hair follicles from scalp areas that have a genetic predisposition to continue growing new hairs, such as the hairs on the side and back of the head.
They move these third type of hair follicles to areas on the scalp where the hair follicles have been programmed to cease hair growth when exposed to male hormones.
The location on the scalp does not affect the genetic programming of the relocated follicles, since the genetic program is dominant over other factors and they continue to grow hairs in the new location.
The follicle enlarges, and a new growth cycle starts and a new hair shaft begins to grow.
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In a 1998 report, scientists at the University of Chicago's Howard Hughes Medical Center explained how they were able to transform normal skin cells of mice into hair follicles.
Many researchers in wound healing have observed such changes in the past, but never have found the precise signal factor for this transformation.
The University of Chicago researchers found that a protein called beta catenin is able to convert normal skin cells into hair follicles.
The message for this protein was successfully introduced into the skin cells of mice and this converted the cells into hair follicle cells and produced very hairy mice.
In the future, it may be possible to genetically introduce the genes for beta catenin into your scalp where hair is not growing well.
Genes can be carried into cells with harmless viruses and such effects are usually well localized. This breakthrough should reach clinical use within 10 to 15 years.