Asia_OTC_conference(Frank).pptx [final]

The Regulation Framework, Market and Future Trend of South Korean Health Functional Food (HFF)

SEAH bio solution™

Presented to Nicholas Hall’s 2nd Asian OTC Conference Singapore October 2015 Sun-Ho Frank Kim (Ph.D.)/ President


Agenda

Economy & Health Trend in Korea

Health Functional Food

• Regulatory Framework in Korea

• Market Overview and the Trend

Marketing Strategy


• Korea is rich in human resources due to great enthusiasm

for education.

• The increase of the senior citizen

Society

• ‘Korea Wave’ leave its mark in Asia

• Korea’s Internet usage rate tops 80%

• The world powers of IT & BT

Culture

• Korea as world 14th largest economy in 2014

• Korea’s income per surpasses $24,000 in 2014

• Korea’s real GDP growth in 2014 was 3.3%

Economy


Korean at a Glance

1981 1991 2001 2002 2010 2020 2030 2050

Life Expectancy

66.2 71.7 76.5 77 79.1 81 81.9 83.3

Female

Male

age

year

Source: Korea National Statistical Office, The Future Estimated Population. 2014


Korean at a Glance

2005

Male Female

2050

Male Female

Source: Korea National Statistical Office, The Future Estimated Population. 2014


Regulatory Framework of

Health Functional Food Act (HFFA) in Korea

The Health Functional Food Act was enacted in August 2002 to ensure the safety of

health functional foods with certain health claims for consumer information.

Product intended for use to enhance and preserve the human health with one or

more functional ingredients or constituents was defined as the "Health Functional

Food (HFF)".

Certain products in the form of tablets, capsules, powders, granules, pastes, gels,

jellies, bars were covered by the Act, and the scope was extended to include

conventional foods and other diet supplements by the revised act in 2008.

MFDS(ex-KFDA) has exclusive authority to give pre-market approval.


What is Health Functional Food?

Source: Ministry of Food and Drug Safety (2015)

http://www.google.co.kr/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&ved=0CAcQjRxqFQoTCLGBmPXQ18cCFeIspgod1WcA2w&url=http://hdjungin.tistory.com/entry/%EA%B1%B4%EA%B0%95%EA%B8%B0%EB%8A%A5%EC%8B%9D%ED%92%88%EC%9D%B4%EB%9E%80-1&bvm=bv.101800829,d.dGY&psig=AFQjCNH7GUm7XQPrWqoVV-C7I68PfjG6_Q&ust=1441258624587312


The World Regulations

Source: Nutraceuticals World (10. 2012)

Substances intended for use in the diagnosis, cure, mitigation, treatment, or prevention of

Disease.

A processing food used with intention enhance and preserve human health by Physiologically functional ingredients and/or components in forms of tablet, capsule, powder..

All edibles intended for human consumption excluding medicinal use Food and beverages for sales


Definition of HFF

Pharmaceutical HFF Food



Health Functional Food Act (HFFA)

Ensure public health & consumer protection

Assure safety & improve

quality

Establish sound environment for

selling and distribution



History of the HFFA

• Enactment of HFFA (2002)

• Enforcement of HFFA and HFF Code (2004)

• Establishment of Standard on GMP (2004)

• Introduction of framework for scientific evaluation on HFF (2004~2007)

• Renewal of HFF Code (2008)

• Introduction of traceability system for HFF (2008)

• Development of framework for scientific evaluation on HFF (2008~2011)

• A comprehensive regulatory framework for Health Functional claim

• Re-evaluation of health claim of the functional ingredients and HFF

Introduction (2002~2007) Development (2008~2011) Improvement (2012~)


The regulation framework keeps improve development


Health Claims -HFF

Classification Definition Available labeling (example)

Nutrient function claim

Relates to any physiological role of the nutrients in growth, development and normal functions of the human body.

"Physiological effect of nutrients on human body“ (Scientific evidence)

Biologically active function claim

Relates to any positive contribution to health to the improvement of a function, or to modifying or preserving health in the context of the total diet.

Grade 1 "Can have a beneficial effect on...“ (Significant scientific agreement)

Grade 2 "May improve / increase / decrease...“ (Convincing)

Grade 3

"May improve / increase / decrease.., but the scientific evidence on human study is insufficient.“ (Probable)

Reduction of disease risk

Relates to the reduced risk of developing a disease or health-related conditions in the context of the total diet.

"Can help to reduce the risk of dental carries“


This claim categorization system is compatible with the guidelines established by the

Codex Alimentarius Commission (2004)

Listed HFF • KFDA provides the standards and

specifications for manufacturing, usage and maintenance of health functional food [Article 14(1)].

• 88 types ingredients included in HFF code, covering nutritional supplements (28 types) and functional supplements (60 types).


Classification -HFF

Product Specific HFF • Require evidences that a

physiologically new functional ingredient is safe and effective before marketing.

• Require an establishment of the standards and specifications of the product containing a physiologically new functional ingredient before marketing.


Conforming with international standards and protecting public health

requires constant upgrading of the Health/Functional Food Act.


Documents List for dossier – Product Specific HFF Ingredient

Manufacturing part

• Manufacturing method

• Characteristics

: description, property of matter, etc.

• Identification

: content(s) of active component(s), structure, production yield, MoA, etc.

• Standards and specifications of hazardous substance

: residual solvent, heavy metals, microorganisms, antibiotics, etc.

Safety part

• Safety

: toxicology studies conducted at GLP compliance lab.

Summary part

• Overall Summary

• Development, reason for the development, usage and legality in other countries

• Storage and shelf life

• Evidences that the product is not a pharmaceutical drug

Efficacy part

• Efficacy

: non-clinical (in vitro & vivo, mode of action) and clinical studies

• Proper daily intake amount and direction for intake



Decision tree for safety evaluation

Health Functional Food Act. Article 13(8), Ministry of Food and Drug Safety (2015)

Evaluation system was designed based on the US FDA's NDI Decision Tree.

Review for Evaluation

(Standard/Specification/Safety/Efficacy..)

Approval of HFF Ingredient

Code of HFFs

120 working days

Finished product containing the approved HFF ingredient

Overview in approval process of Product Specific HFF

SEAH bio solution™ Source: Ministry of Food and Drug Safety (2015)

Nutrition/Function Information Serving size Per serving Contents % RDI Calories 150 kcal Carbohydrate 23 g 7% Protein 2 g 3% Lipid 6 g 11% Sodium 55 mg 2% Vitamin C 11 mg 20% Calcium 20 mg 7% % RDI : Percentage of Recommended Dietary Intake

Information on the nutrient contents

per serving & percentage of RDI

Health Claim(s)


Requirement of the Label HFF

Source: SEAH bio solution


Label of HFF -example

(health claim) “Vitamin-E may protect cell from the

oxidative radical”



Market Overview and Trend of

Health Functional Food (HFF) in Korea


Korean Pharmaceutical & Health Functional Food Market

Korea National Statistical Office (2014 )

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

2008 2009 2010 2011 2012

($Mil.)

ETC

OTC

HFF

CAGR (2008-2012)

= 11.7%

CAGR (2008-2012)

= -14%

CAGR (2008-2013)

= 11.9%

0

500

1,000

1,500

2009 2010 2011 2012 2013

($Mil)

Production in Korea

Import Amount

Export Amount

Korean market Size

The Market Size and Growth of Korean HFF


*Market Size = Production + Import – Export

*

Ministry of Food and Drug Safety (Aug. 2014)

CAGR (2009-2013) = 11.9%

The Market Size and Growth –Production ($ Mil.)

SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)

Red Ginseng, 493.0

Product Specific HFF, 195.0

Vitamin & Minerals, 67.0

Probiotics, 53.0

Aloe, 45.0

Garcinia Cambogia,

41.0

Omega-3, 39.0

Ginseng, 39.0

Milk Thistle, 26.0

GLA, 16.0

etc, 122.0

The Market Size and Growth –Import ($ Mil.)


Vitamin &

Minerals, 137.5

Omega-3, 49.1

Product Specific

HFF, 17.8

Protein, 16.9

Probiotics,

15.7

Aloe,

12

GLA, 8.1

Dietary

fibre, 7.1

CLA,

6.1

Garcinia

cambogia, 6

etc, 46

The Market Size and Growth –Production of Product Specific HFF


0.0

10.0

20.0

30.0

40.02011

2012

2013

Perc

enta

ge (%

)

Leading top 4 Product Specific HFF


Cynanchum wilfordii extract (PMS) Oriental raisin extract (Liver health)

Dong quai extract (Immunity)

Mate extract (Body fat reduction)

http://www.google.co.kr/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCP60ver34ccCFYihlAodSk0G3Q&url=http://www.junggi.co.kr/article/articleView.html?no%3D8469&bvm=bv.102022582,d.dGo&psig=AFQjCNGamPxgunHIfHraeOpnKxWupYilsw&ust=1441612667667670

http://www.google.co.kr/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&uact=8&ved=0CAcQjRxqFQoTCMH9vv_34ccCFYmblAodfngLmw&url=http://www.jhnews.co.kr/news/articleView.html?idxno%3D270766&bvm=bv.102022582,d.dGo&psig=AFQjCNFHaDvdTrVLQY7SOr2YmT6I5Dv4RQ&ust=1441612704102920

The Market Size and Growth –Health Claim


Immunity Enhancement

25%

Blood Circulation 22%

Anti-oxidant 20%

etc. 8%

Nutrition Supplement

6%

GI tract 5%

Body Fat Reduction

4%

Hepatoprotection 3%

Skin Health 3%

PMS 2%

Sports Nutrtion 2%

Health claim approval trend of Product Specific HFF


2004~2006

• Hypertension and

Hyperglycaemia

• Tooth health

• Cognitive

• Body fat

• Bone health

• Immunity

• Skin health

• Anti-oxidant

• Gut health

• Prostate health

• Liver function

2007~2009

• Prostate health

• Eye care

• Sports nutrition

• Calcium absorption

• Anti-fatigue

2010~

•Premenstrual and postm

enopausal syndrome

•Men’s health

•Sperm activity

•Vagina health

•Height growth for kids

•Bladder function

•Hyper sensitive skin

•Gut health

Chronic disorder Specific function

Distribution Channels ($ Mil)


Channels 2012 2013 Growth ratio

(YoY %)

Health Food Store 311.5 296.1 (4.9)

Department Store 214.6 185.4 (13.6)

Mass MKT 170.0 175.8 3.4

Pharmacy, Hospital and other

46.8 64.3 37.4

MLM 1,028.3 1,073.4 4.4

Door-to-Door Sale 788.3 711.8 (9.7)

Home Shopping 141.8 189.4 62.9

etc. 222.1 238.0 7.1

Total (top 23 companies only) 2,923.4 2,934.2 0.4

SEAH bio solution™ FAIR TRADE COMMISSION (2014)

Leading top 5 MLM companies in Korea (sales; $ Mil)

Company 2009 2011 2013 Growth

ratio (2013, YoY %)

Amway Korea 642.6 857.2 998.7 5.8

Herbalife Korea 146.2 386.2 477.0 (1.1)

Nuskin Korea 182.3 197.2 470.6 52.6

Atomy n/a 108.0 285.6 44.8

Unicity Korea n/a n/a 130.0 72.4


Marketing Strategy of

Health Functional Food Act (HFFA) in Korea

Growth & Impediment factors of HFF


Increasing the scopes of health claim and the numbers

Increasing consumer’s awareness in prevention for health

Business opportunities emerging for the Korean Traditional botanicals

CAGR 11.9%

“Pre-market approval”

Distribution Channel

Lack of global business insight and approach



Key Successful Factors of HFF

Cost of daily intake in comparison with the same health claim (e.g. $0.05/d. for Garcinia cambogia) Feasibility

e.g. Ayurveda(India), Jamu (Indonesia), Unani(Middle East), Sen (Thailand), Rongoa (Oceania) ..

Sourcing

e.g. Glucosamine, Peptides, Probiotics.. Re-Entry

Business representative in Korea can help navigate; Registration /Distribution /Scientific support /Language barrier..

Partnering


Key Value Elements of HFF

SEAH bio solution™ Source: SEAH bio solution

CELERS model (Kim, AECES & CELERS model. 2005)

Recognition

Efficacy

Efficacy

AECES model (Marchut et al, Power of AECES. 2005)

Supply

Side

Market

Side

Regional Legality Study

2016 2015

Competition & Cost Analysis

Screening (in vitro)

Distribution Channel Study

IP (Set up by region) IP (Searching)

Human clinical (IRB)

2018

Registration by region (NDI, EFSA, FOSHU, TGA ,HFF..)

2017

Safety & Mode of Action

in vivo

Standardization


Roadmap –B/D Strategy for new Product Specific HFF



Consulting Performance of SEAH bio solution Client Nation Date Consulting Accomplishment

CJ CheilJedang

Korea

2007~2012

1. HFF ingredients licensing-in 2. Business exploration

5 kinds of HFF ingredients Has been registered and Licensing-in.

CJ CheilJedang Ingredient BU

2007 Strategy consulting for new business development

reported

Microherb Co. 2007 Asian Market exploration of European herbs.

Export initiated to Japan

CLINWorld India 2007 Contract researches of clinical studies on process

Didim Biotech Korea 2007 Overseas market exploration with Korean herb extract

on process

IFFC Japan 2008~2009

Korean market exploration of Japanese fermentation based ingredients

on process

Aker BioMarine Norway

2008~2010

Korean market exploration of Norwegian ingredients

HFF registration arranged

Biofood Network Korea 2010 Overseas market exploration with Korean HFF ingredients

Three items has been successfully introducing for export

Daesang Korea 2009~2010 2014~

1. Overseas market exploration with Company’s ingredients 2. OEM production arrangement

Two items has been successfully introducing for export / OEM on process..

SFI Australia

2012~2015

Natural Medicine (OTC) market exploration

on process

Dongbu Farm Korea 2013 Strategy consulting for new business development

reported

NutriSolution Inc. Japan 2013~ Strategic Alliance in consulting for Korea and Japan

on process

Company A Korea 2015~ Health Functional Product Registration and Strategic planning for global marketing

on process

Seoul National Univ

Korea 2015~ Wellness Business Developments on process

Item Licensee Reg. No

. Date

d Health Claim Level

Hyaluronic Acid CJ CheilJedang No. 2008-17

May 2008

Skin Health (Moisture Retaining)

Class II

Hyaluronic Acid (HA-LF-P)

CJ CheilJedang No. 2009-43

May 2009


Class II

Coleus forskolii ext.

CJ CheilJedang No. 2009-47

June 08 2009

Reducing Body Fat

Class II

Beer Hop ext. CJ CheilJedang No. 2009-25

April 21 2009

Joint care Class II

Bacopa monnieri extract

SFI Korea Cognitive Health

2015. 03 dossier submitted

Hyaluronic Acid (HA-LF-P)

Chungwoo Life Science

Documents Submitted

Jan 2014


Class II

Ingredient A “A” company, Japan

Documents Submitted

March 2015

Food Additive 2015. 03 dossier submitted