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.

Rita King, 81, who had dementia, died after being shot at De La Mer House, in Walton-on-the-Naze, Essex, in December.
Her husband, Ronald King, who has a mental health condition, admitted manslaughter on the grounds of diminished responsibility.
Judge Charles Gratwicke, at Chelmsford Crown Court, told him: "This was not a mercy killing."
He added: "This was without a doubt a carefully planned killing."
Killer told care home: 'I just killed the wife'
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The trial was told Mrs King's severe dementia had worsened in the months before her death and her husband had Alzheimer's and another mental health condition called paraphrenia which affected his ability to form judgements.
King, of Cedar Close, Walton-on-the-Naze, denied murder at an earlier hearing, but pleaded guilty to a lesser charge of manslaughter on the grounds of diminished responsibility.
During the trial, the jury heard King also considered shooting his older sister Eileen, who is a resident at the care home, as well as himself.
Mr King was sentenced to six years for manslaughter, five years for firearm possession and 12 months for possessing ammunition. All three terms will be served concurrently.
The judge ordered he be treated for his mental health condition at a secure hospital unit in Northampton.
Consultant psychiatrist James Warner said paraphrenia was an older person's version of schizophrenia in which people lose contact with reality.
Scientists at a Welsh university hope to help turn frankincense into the next new "super-ingredient".
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An 87-year-old man who shot his wife dead at a care home has been sentenced to six years in prison.