FANCL's revenue climbed from ¥800m (US$7.2m) to ¥5bn (US$45.5m) in the period since the FFC system was introduced.
The information was revealed by FANCL's executive VP and director, Kazumi Miyajima, when he was speaking a panel discussion at an event organised by Japan Direct Marketing Association (JADMA) recently. The theme of the event was to commemorate the FFC system's fourth 'anniversary'.
A check on Plus Aid – an online database which keeps track of FFC launches – shows that FANCL is one of the companies with the highest number of approved FFC with 31 approved products.
Nippon Suisan and Ezaki Glico are the other major FFC manufacturers, with 61 and 55 products as part of their portfolios respectively.
In the past four years, the number of FFC products has hit 1,785, with nearly 300 companies manufacturing the FFC products. This is higher than the other framework introduced in 1991, the Food for Specified Health Use (FOSHU), which has about 1,068 products approved.
“We use to have only the FOSHU system that requires approval from the government. The system is probably good for the major companies, but the small and medium enterprises could not cope with it due to the time and cost involved. But for the FFC, it is quite easy, because manufacturers will only need to notify the CAA (without approval from the government).
“FFC has dramatically increased the number of new products due to the low barrier of entry as compared to FOSHU,” Hisaaki Kato, CEO and president of consultancy firm Smooth Link told NutraIngredients-Asia.
“There are always good and bad side (to the system). One of the successful cases of the FFC system is FANCL. They used to have a dietary supplement called ‘Enkin’ which contains lutein and is said to be good for the eyes. After they have switched the product to a FFC, the sales of the product have increased by more than four times,” he added.
The FFC system not only fulfils commercial but also the national economic purpose.
Against the backdrop of a greying population, the government believed that a way to revitalise the economy is by producing and selling more health food products, which gave birth to the FFC system.
Under the system, the manufacturers would have to show evidence of the efficacy of their products via clinical trials or systematic literature review.
As for the product format, FFC could range from capsules to general food forms such as beverage to yogurt.
Competition getting tougher?
While some companies have reaped a fortune from the FFC system, the failure rate of new FFC products are relatively high due to tough competition arising from similar product claims.
Data from two years ago showed that 60% of the FFC products launched are still on sale, 8% have discontinued production while 30% did not even manage to enter the market in the first place.
Kato explained that the challenge was that manufacturers had little space to manoeuvre within a restrictive regulatory framework.
When marketing their products, they are required to adhere to the Pharmaceutical Act and the Act Against Unjustifiable Premium and Misleading Representations. Thus, many ended up making similar claims. A typical expression, according to Kato’s observation, is “support your health”.
“If you go to the convenient stores to buy the health foods, all the products would say ‘support your health’ .They are too similar, which is why the competition is getting tougher.
“Sometimes, once you have your FFC products ready for sale, you might find that your competitors are launching similar products at the same time too.”
Can consumers differentiate?
There is also the issue of consumer understanding.
“The FFC can be bought in convenience stores next to the general foods and their price are also quite similar, so there is this issue of whether the consumers are able to differentiate the products,” Kato said.
During the panel discussion held by JADMA, industry players have also suggested the CAA to come out with an easy-to-understand and iconic name for FFC products, similar to the FOSHU framework where products are identified by the term “Tokuho”.
Kato added that the CAA has been cooperating with the industry to educate consumers about FFC products.
For example, it had provided a search function on its website, allowing consumers to search and verify if a particular product is a FFC since March this year.
As for FOSHU, he said that the authorities are trying to simplify system by speeding up the time needed for product review and expanding the list of approved ingredients.