A specialist unit at Bangor University has refined ways of isolating active ingredients in the natural resin.
The expertise in analysing the substance is now being used by the Swansea-based Compton Group to develop commercial uses for the substance.
Frankincense was one of the gifts given to the infant Jesus by the Wise Men, according to the Bible story.
The tale of the magi's search for the child is celebrated by Christians on Epiphany - the 12th day of Christmas, which falls on 6 January.
Frankincense resin is used as incense in religious ceremonies and has been used in traditional medicinal remedies for thousands of years.
It comes from the sap of Boswellia trees in parts of Asia and Africa, in particular Somalia, Ethiopia and Oman.
More recent research at Cardiff University into the properties of frankincense has suggested it has anti-inflammatory properties.
Dr Ahmed Ali, a research consultant for the Compton Group, said work at Bangor University's school of chemistry and its Bio-Composites Centre should help develop new commercial uses and applications for the resin.
"Previous research has established that frankincense could help people with arthritis. It is hoped that not only will pain be relieved, but also further damage to ligaments and bones will be prevented," he said.
"I've been investigating frankincense for over ten years and am delighted that developments are moving apace."
Dr Ali said discussions are well under way with collaborators in the United States to establish new markets for products based on the frankincense research, with patents already lodged in Europe, China and the US.
Scientists at a Welsh university hope to help turn frankincense into the next new "super-ingredient".