The document summarizes the regulation framework, market, and future trends of South Korea's health functional food industry. It outlines the key regulatory body that oversees HFF products, the classification system for HFF claims and ingredients, and the approval process for new product-specific HFF ingredients. It also provides an overview of the size and growth of the Korean HFF market in recent years, major import and export categories, leading product types, and most popular health claims. The market for HFF products in South Korea has grown significantly in recent years and is expected to continue expanding.

1. 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

2. SEAH bio solution™
Agenda
Economy & Health Trend in Korea
Health Functional Food
• Regulatory Framework in Korea
• Market Overview and the Trend
Marketing Strategy

3. SEAH bio solution™
• 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

4. SEAH bio solution™
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

5. SEAH bio solution™
Korean at a Glance
2005
Male Female
2050
Male Female
Source: Korea National Statistical Office, The Future Estimated Population. 2014

6. SEAH bio solution™
Regulatory Framework of
Health Functional Food Act (HFFA) in Korea

7.  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.
SEAH bio solution™
What is Health Functional Food?
Source: Ministry of Food and Drug Safety (2015)

8. SEAH bio solution™
The World Regulations
Source: Nutraceuticals World (10. 2012)

9. 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
SEAH bio solution™
Definition of HFF
Pharmaceutical HFF Food
Source: Ministry of Food and Drug Safety (2015)

10. SEAH bio solution™
Health Functional Food Act (HFFA)
Ensure public health & consumer protection
Assure safety & improve
quality
Establish sound environment for
selling and distribution
Source: Ministry of Food and Drug Safety (2015)

11. SEAH bio solution™
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~)
Source: Ministry of Food and Drug Safety (2015)
The regulation framework keeps improve development

12. SEAH bio solution™
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“
Source: Ministry of Food and Drug Safety (2015)
This claim categorization system is compatible with the guidelines established by the
Codex Alimentarius Commission (2004)

13. 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).
SEAH bio solution™
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.
Source: Ministry of Food and Drug Safety (2015)
Conforming with international standards and protecting public health
requires constant upgrading of the Health/Functional Food Act.

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

15. SEAH bio solution™
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.

16. 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)

17. 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)
SEAH bio solution™
Requirement of the Label HFF
Source: SEAH bio solution

18. SEAH bio solution™
Label of HFF -example
(health claim) “Vitamin-E
may protect cell from the
oxidative radical”
Source: SEAH bio solution

19. SEAH bio solution™
Market Overview and Trend of
Health Functional Food (HFF) in Korea

20. SEAH bio solution™
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%

21. 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
SEAH bio solution™
*Market Size = Production +
Import – Export
*
Ministry of Food and Drug Safety (Aug. 2014)
CAGR (2009-2013)
= 11.9%

22. 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

23. The Market Size and Growth –Import ($ Mil.)
SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)
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

24. The Market Size and Growth
–Production of Product Specific HFF
SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)
0.0
10.0
20.0
30.0
40.0
2011
2012
2013
Percentage(%)

25. Leading top 4 Product Specific HFF
SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)
Cynanchum wilfordii extract (PMS) Oriental raisin extract (Liver health)
Dong quai extract (Immunity)
Mate extract (Body fat reduction)

26. The Market Size and Growth –Health Claim
SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)
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%

27. Health claim approval trend of Product Specific HFF
SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)
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

28. Distribution Channels ($ Mil)
SEAH bio solution™ Ministry of Food and Drug Safety (Aug. 2014)
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

29. 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

30. SEAH bio solution™
Marketing Strategy of
Health Functional Food Act (HFFA) in Korea

31. Growth & Impediment factors of HFF
SEAH bio solution™
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
Source: SEAH bio solution

32. SEAH bio solution™
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
Source: SEAH bio solution

33. 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)

34. Supply
Side
Market
Side
Regional Legality Study
20162015
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
SEAH bio solution™
Roadmap –B/D Strategy for new Product Specific HFF
Source: SEAH bio solution

35. SEAH bio solution™
Consulting Performance of SEAH bio solution
Client Nation Date Consulting Accomplishment
CJ CheilJedang
Korea
2007~20
12
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
2008~20
09
Korean market exploration of
Japanese
fermentation based ingredients
on process
Aker BioMarine
Norw
ay
2008~20
10
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
2009~20
10
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
Austr
alia
2012~20
15
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. 20
08-17
May
200
8
Skin Health (
Moisture Reta
ining)
Class II
Hyaluronic Acid
(HA-LF-P)
CJ CheilJedang No. 20
09-43
May
200
9
Skin Health (
Moisture Reta
ining)
Class II
Coleus forskolii e
xt.
CJ CheilJedang No. 20
09-47
June
08 2
009
Reducing Bod
y Fat
Class II
Beer Hop ext. CJ CheilJedang No. 20
09-25
Apri
l 21
200
9
Joint care Class II
Bacopa monnieri
extract
SFI Korea Cognitive Heal
th
2015. 0
3 dossi
er sub
mitted
Hyaluronic Acid
(HA-LF-P)
Chungwoo Life
Science
Docum
ents Su
bmitte
d
Jan
201
4
Skin Health (
Moisture Reta
ining)
Class II
Ingredient A “A” company, J
apan
Docum
ents Su
bmitte
d
Mar
ch 2
015
Food Additive 2015. 0
3 dossi
er sub
mitted