Quasi-drug Industry

An Expert's View about Sales in Singapore

Last updated: 28 Feb 2011

Summary

(Note: CS Korea wrote this report for U.S. exporters to help better understand the quasi-drug market
focusing on human use in Korea, since the quasi-drug may be a unique term, which is not used in the
U.S., but is used in a few countries including Korea. Briefly, a quasi drug is a lower risk product than a
drug used for human or animal, which has weak effect on the human body. Quasi-drugs are required to
prove safety and function though, and all domestic and foreign products classified as falling under the
quasi-drug category in Korea are subject to pre-market licenses from the Korea Food & Drug
Administration (KFDA). The definition of quasi-drugs under Korea’s Pharmaceutical Affairs Act (PAA) is
as follows:

1) Goods made from fiber, rubber, or similar materials used in humans or animals for the
purpose of curing, alleviating, treat, or preventing diseases;

2) Goods having weak effects on the human body, which do not directly affect the body,
and which are not instruments or equipment, or the like;

3) Medicines used to sterilize, kill insects and other vectors to prevent epidemics.
For a more detailed description of quasi-drugs in Korea, please see the Market Access and Barriers
section below. )

The market for quasi-drugs reached approximately US$740 million in 2009 (based on import price). It is
forecast to grow by three to five percent annually over the next three years. Imported quasi-drugs were
valued at US$ 116.3 million in 2009. Of the imports, the U.S. was the largest source, followed by Japan,
France, and Switzerland. The Korean government requires all domestic and foreign origin quasi-drug
products to receive a pre-market license from the Korean Food & Drug Administration (KFDA). Since
KFDA issues the product license only to locally based firms, all foreign suppliers should submit
documentation required by KFDA to their Korean importer and receive the license through the importer.
Quasi-drugs can be sold in retail stores as well as pharmacies, while all drugs, which contain ethical
(ETC) drugs and over-the-counter (OTC) drugs, may only be sold in pharmacies in Korea.

Market Demand

Quasi-drugs and over-the-counter (OTC) drugs fall under different categories in Korea. Quasi-drug
products can be sold anywhere. For example, they can be sold in retail stores as well as in pharmacies.
In Korea, OTC drugs, such as Aspirin and Tylenol, may only be sold in pharmacies because OTC drugs
are classified as drugs in Korea. Currently, all drugs, comprising both ethical (ETC) drugs and over-the counter (OTC) drugs, are to be sold in pharmacies only in Korea.

Increasing demand for healthier lifestyles and greater life expectancy in Korea are driving demand for
more variety and more sophisticated quasi-drug products. Average life expectancy of Koreans in 2007
was 79.1 years of age. This is according to the WHO statistics in 2009. Encouraged by these trends,
Korean consumers show strong interest in products offering unique benefits and better quality. Among
the leading quasi-drug products in 2009 were insecticides, including mosquito coils, hair dye products,
toothpastes with additional functionality, contact lens care products, sanitary products, gauze, bandages, mouth wash, and antiseptic hand wash products. The popularity of these categories is expected to continue in 2010.
Statistics from the Korea Pharmaceutical Traders Association (KPTA) indicated that Korean production of
quasi-drugs increased by approximately 5 percent in 2009 over 2008. However, increased demand for
hand antiseptics to contain H1N1 Flu increased sales of this category by more than 30 percent in 2009.
Overall imports decreased approximately by 17 percent during the same period in response to the
economic downturn in Korea and worldwide recession, highlighting the resilience of demand for quasidrugs.
Although Korean production of quasi-drugs greatly exceeded imports in total sales, high-end
foreign origin products will maintain a strong market presence. Industry sources believe that demand by
senior citizens is particularly sensitive to perceptions of superior product quality, including sanitary pads
and denture care products, and will remain strong over the mid-term since Korea has the most rapidly
growing number of elderly people among Asian countries.


Market Data

In 2009, as in both previous years, the Korean market for all quasi-drug products held steady at about
US$ 737.8 million. In the context of an overall economic downturn and higher value of the Korean won
versus the U.S. dollar, steady volumes in quasi-drugs indicate the strength of this market. Industry
sources predict that the quasi-drug market will grow steadily again over the next several years at an
annual rate of 3-5 percent as Korea’s economy continues to recover.

Local production meets the majority of demand for quasi-drug products. Approximately 85 percent of
total demand was supplied by Korean production, with imports providing variety and perceived high
quality capturing the remaining 15 percent. Leading segments among imported quasi-drugs are sanitary
products, hair dyes, contact lens-care products (e.g. for cleaning, sterilizing or storage, etc.), toothpastes
with unique function, and insecticides. The United States was the largest source of imports, accounting
for about 25 percent of the market and US$ 29.1 million in 2009. Other leading foreign sources were
Japan and France.

Read the full market research report
 


Posted: 18 February 2011, last updated 28 February 2011

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