Pharmaceutical companies are expanding their health functional food (HFF) business. HFFs are foods that help health and must contain ingredients approved by the Ministry of Food and Drug Safety. Earlier, when the low-cost lifestyle store Daiso sold HFFs from pharmaceutical companies, pharmacists protested, but the number of companies entering the market actually increased. New pharmaceutical companies have also emerged, establishing HFF firms or expanding their sales channels.
According to the Korea Health Functional Food Association, the domestic HFF market size grew from 1.2 trillion won in 2005 to 6.04 trillion won last year. The industry projects that the HFF market will grow to 25 trillion won by 2030. Pharmaceutical companies are targeting the rapidly growing HFF market by leveraging their experiences in creating pharmaceuticals with strict approval processes to gain consumer trust.
◇Creating subsidiaries for HFF and enhancing expertise
HANDOK recently launched a subsidiary called HANDOK Healthcare dedicated to HFF. The new entity was created by integrating the Japanese functional ingredient company Terravalues, which HANDOK acquired in 2016, with its consumer healthcare division.
HANDOK Healthcare will target the HFF market centered on Terracurcumin, made from curcumin. Curcumin, a component found in turmeric in curry, helps reduce inflammation in blood vessels and has antioxidant effects. HANDOK has made the curcumin particles smaller to enhance the absorption rate in the body.
Terracurcumin is being sold at Emart Traders and e-commerce company Amazon. A company official noted that “interest in curcumin is high not only in South Korea but also in the United States.”
Huons Group recently established an integrated HFF corporation called Huons EN. After partitioning its HFF business division, it merged with the subsidiary Huons Pudians. Huons Group has independently developed ingredients such as menopausal lactobacillus (YT1) and extracted powder from the Four Gods.
Huons EN has facilities for producing HFFs in various forms. It can create liquid products that are easy to drink and preferred by the elderly, as well as jelly and powdered stick forms popular among those in their 20s and 30s. A Huons EN official stated, “This is a business structure that connects everything from research and development to manufacturing and distribution.”
◇Expansion of Daiso despite pharmacists' protests
AHNGOOK PHARMACEUTICAL, Chong Kun Dang Health, Daewoong Pharmaceutical, and DXVX are currently selling HFFs at Daiso. Dongkook Pharmaceutical is registering and selling products containing vitamins and retinol as general foods. Their prices are cheaper than those at pharmacies, ranging from 3,000 to 5,000 won. They lowered prices by adjusting the ingredients and contents.
Earlier, when Daewoong Pharmaceutical, Chong Kun Dang Health, and Il-Yang Pharm started selling HFFs at Daiso at the end of February, pharmacists protested, saying they would launch a “boycott against the Pharmacies entering Daiso.” While the HFFs sold in pharmacies account for only 4% of the entire market, pharmacists opposed this due to concerns that other over-the-counter drugs might be sold by retail vendors.
At that time, although the pharmaceutical companies were expected to be deterred by the pharmacists' protests, supported by consumers, DXVX, Dongkook Pharmaceutical, and AHNGOOK PHARMACEUTICAL actually entered Daiso as well. Il-Yang Pharm is the only company that withdrew from Daiso.
Pharmaceutical companies are also paying attention to the convenience store market. GS25 plans to officially sell around 30 types of HFFs such as probiotics and vitamins at approximately 3,000 stores nationwide starting in August this year. A GS25 official mentioned, “We plan to expand HFFs as main products in the future.”
CU is also testing HFFs at its Myeongdong Station location while observing market reactions. An industry official stated, “Healthy pleasure is trending, where people enjoy managing their health,” adding that “pharmaceutical companies are widening their sales channels in convenience stores, allowing customers to easily purchase HFFs.”
◇Increasing consumption among younger demographics leads to diversified marketing
While the elderly primarily sought HFFs in the past, the consumer base has recently broadened to include younger generations, resulting in market growth. Following the COVID-19 pandemic, more people are taking an interest in health management. As the trend of slow aging through healthy lifestyles gains popularity, individuals in their 20s and 30s have emerged as key consumers. An industry official stated, “The elderly prefer ginseng, while younger demographics are inclined towards probiotics.”
In line with market trends, pharmaceutical companies' marketing of HFFs has also diversified. JW Pharmaceutical is hosting HFF events with the real estate information platform Dabang. They will provide a daily all-in-one day pack containing eight types of vitamin B and taurine to 100 participants at the event. Dabang is frequently used by young social newcomers in their 20s and 30s. A company official stated, “We collaborated to naturally introduce the benefits of HFFs to younger audiences.”
Samjin Pharm will hold an HFF event called ‘Daily Engine Immune Booster Shot’ at Incheon SSG Landers Field baseball park on the 24th. As professional baseball is extremely popular among the younger demographic, the company is preparing HFF marketing at the baseball park. The Daily Engine Immune Booster Shot is designed to support muscle function, liver health, and endurance, and it comes in a liquid form combined with pills. Attendees will have the chance to participate in a roulette for this product.