Cosmeceuticals are a growing market

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By Richard Smart for The Journal (ACCJ)

Japanese consumers are increasingly interested in buying cosmetic products that allow them to save time, are more effective, and are about more than just looking good. Cosmeceuticals — cosmetics with pharmaceutical properties — are a growing market globally. They offer consumers a chance, at least according to the marketing, to improve their health and beauty at the same time.

Officials in the U.S., however, do not believe the hype. Cosmeceuticals are not officially acknowledged on the other side of the Pacific. U.S. law “defines drugs as those products that cure, treat, mitigate or prevent disease, or that affect the structure or function of the human body,” according to the Food and Drug Administration. The agency’s “Labeling Claims” document for cosmeceuticals specifically states: “While drugs are subject to a review and approval process by the FDA, cosmetics are not approved by the FDA prior to sale. If a product has drug properties, it must be approved as a drug.”

“The way to think of cosmeceuticals is [that they are] similar to the supplements industry,” says Nicole Fall, trend forecaster at Asian Consumer Intelligence. Supplements “are not a food and they are not a drug; they are a hybrid. It’s the same thing with cosmeceuticals, they contain something that could have side effects as well as benefits.”

A 2014 paper in ISRN Dermatol pointed out that cosmeceuticals using nanotechnology, for example, could pose risks. “If nanoparticles are inhaled and eaten accidentally, or absorbed through skin, they could cause skin and lung damage and organ toxicity, or can harm unborn children,” according to the paper. However, “The cosmeceutical industry debates that consumer risks are low, as there is no evidence that nanoparticles from the product penetrate healthy, intact adult skin.”

Consumers appear to be on the industry’s side. Research and Markets estimated in January that the global market for cosmeceuticals would be worth $61 billion by 2020. According to Mordor Intelligence, Japan’s cosmeceutical market will see a compound annual growth rate of 8.1% between 2015 and 2020. “Cosmeceuticals growth in Japan is expected to be driven by expanded … digital marketing and the offer of personalized customer experiences and e-commerce,” Ken Research says. Whether or not cosmeceuticals have the health benefits they claim, companies that sell products in this space are likely to see a bright future.


Much like homeopathy, cosmeceuticals are said to work through small daily applications of creams, lotions, and other cosmetics that contain negligible amounts of medicine. Over long periods of time, this pays off by keeping skin younger or hair stronger, for example.

“It’s all in the marketing really,” says Fall. “Effectively, what people try and do—by mashing together the words cosmetics and pharmaceuticals — is convince the consumer that the products have more efficacy.” Fall points to the fact that prescriptions are not required for cosmeceuticals.

Consumer loyalty, however, points to the fact that many feel the products are of genuine benefit. Major players in Japan include Dr.Ci:Labo, which focuses on skin care using collagen gel, and Shiseido, a major cosmetics player that also runs a cosmeceuticals line called Navision.

Officials at Dr.Ci:Labo declined to speak to The Journal, but their strategy is clear: to position their products as primarily aimed at dermatological care rather than looking good. The company was founded in the late 1990s by a dermatologist, Yoshinori Shirono, and in 1998 launched its first product, a gel.

Dr.Ci:Labo projects net sales of ¥40 billion for its current fiscal year, which ends July 31, and an operating income of ¥8.1 billion. It sells goods primarily through mail order, as well as through more traditional brick-and-mortar cosmetics stores. In addition to doing business in Japan, it is operating in Hong Kong, Taiwan, and Singapore. “Sales from overseas operations reached ¥783 million, an increase of 62.4% year on year,” the company writes in its report for the first half of the fiscal year, ended January 31.

Having captured 38% of the Japanese cosmeceutical market in fiscal 2013, the company has managed, in part, to maintain a healthy position in the market by “refreshing” product lines every few years.

Olay, a skincare range by Procter & Gamble, has followed a similar strategy. Many of its products in Japan have been revamped to appeal to the more discerning cosmetics consumer. “They are trying to move more into the cosmeceutical space,” says Fall. “They use words like RX and EX, which is a Japanese way of saying it is reinforced with something. For Japanese beauty launches, they will release a product, and then later they will put EX or something on the label. That means they have now put something else in it.”


Shiseido, Japan’s largest and the world’s fourth- largest cosmetics company in terms of sales, has taken a different approach with its cosmeceutical lineup, which it markets exclusively in Japan under its Navision brand. The product lineup is aimed primarily at medical institutions.

Navision includes creams and treatments for the skin, as well as devices that measure blemishes and wrinkles that people can use to see the results of treatment. The brand has products for use in medical facilities and others for the home. Away from facilities, the lineup includes a cleansing oil, a washable skin foam, and a medical-use lotion for reducing the roughness of the skin.

“We suppose the size of the market is still limited but steadily growing,” Tatsuyoshi Endo in Shiseido’s corporate communications department tells The Journal. Endo adds that there are no plans to sell the brand overseas.

Shiseido sees the Navision brand as a small part of its business, the company being more focused on brands such as Issey Miyaki, Tsubaki, and Elixir, bigger sellers with a heavy presence in the Japanese market. Navision appears in the “others” section of Shiseido’s financial reporting, an area that also features duty-free stores and restaurants. In 2015, this section saw sales of ¥17.5 billion, a proportion of which was contributed by cosmeceuticals. Overall sales for the business stood at ¥763 billion globally.

Endo says that the company will invest in research and development to further expand its cosmeceutical business, but “it is not our main focus."


Marketed to people as medical goods based on scientific research, cosmeceuticals, in a way, fly in the face of the ideas of natural beauty and taking inspiration from nature. When compared to, say, South Korean products that use creams from snails, ingredients such as N-acetyl-glucosamine, α-tocopherol, and ubiquinone can seem synthetic. In other words, cosmeceuticals appear to go against the general market trend for more natural and environmentally friendly products.

“The paradox works well in Japan, where there is a belief that technology will save the day,” Fall says. “If we see a demand for naturally positioned products, then on the other end of the spectrum you will have products that appear more medical and scientific in their marketing.”

On both sides of the spectrum, “People are looking for something that has got that efficacy,” Fall says. “In Asia, beauty and health trends are generally dictated by three factors: cost, influence, and effectiveness.” Standard beauty products, which tend to be cheaper, will therefore increasingly face competition from niche goods that are more effective and create more buzz.

For fall, this means that if the affluent can afford to pay for something that promises to do more in less time, they will. “As we become busier, and we have more technology making our days less free than they once were, then we will use more and more of these products.”

Custom Media publishes The Journal for the American Chamber of Commerce in Japan.

© Japan Today

©2022 GPlusMedia Inc.

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There is plenty of cosmeceuticals on the US market. One of the more popular is an acne medicine under the name Accutane. Its extremely powerful, and is generally prescribed only in severe cases of acne.

It should be noted that a lot of these cosmeceuticals pose health risks. Many of them have faced class action lawsuits.

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