Japan's Nutraceuticals Today: End of Year Japanese Nutraceutical Industry Thoughts and Looking Beyond

薬食同源 Japan’s Nutraceuticals Today

By Paul Yamaguchi

End of Year Japanese Nutraceutical Industry Thoughts and Looking Beyond

The State of Nutraceuticals in Japan
Amid a fragile economic recovery and weak consumer spending, the Japanese nutraceutical industry may top $30 billion by the end of this year, up 15 percent from a year ago. Again, the functional foods category leads sales, showing a 17 percent increase from a year ago.

As 2004 comes to a close, the state of the Japanese nutraceutical industry is very much in a transitional period. Implementation of new and, some would say, confusing FOSHU (Foods for Specified Health Use) regulations is underway. Agreement regarding good manufacturing practices (GMPs) has so far been unachievable, as regulators could not find uniform protocols and agreement from among industry organizations. Layers of regulations currently restrict what can be printed in advertisements and on nutritional products. Companies making false claims have been fined and their products removed from shelves.

When looking back on the Japanese nutraceutical industry of 2004, it is evident that the stage for the future is taking shape, and we see brighter lights ahead, just as many Japanese who will watch the first sunrise at dawn of the first day of the New Year.

Set For The Future
In the beginning of this year, the word ‘nutrigenomics’ went through the nutritional science community. (Nutrigenomics is described as an order-made nutrition that can be altered based on the expression of an individual’s genetic makeup).

International Life Sciences Japan (ILSI Japan) budgeted $10 million for the development of the next generation of functional foods in the next 5 years. MHLW [Ministry of Health, Labor and Welfare], the agency that regulates the food and pharmaceutical industry, proposed a budget of $200 billion to its congress for the coming fiscal year, an increase of 5 percent from last year. The agency is committed to spend over $500 million for further health improvements and the prevention of lifestyle diseases through product development. The Ministry of Agriculture, Forestry and Fisheries (MAFF) and Ministry of Economic, Trade and Industry (METI) are also allocating their double-digit increased budgets to the development of foods and sciences. Both the private and public sector are investing in the science community to ensure that Japan remains the world leader in nutritional science.

On The Ingredient Front
This year several emerging ingredients were spotted in the market place. Ironically, they are the so-called “Western” ingredients and already have a sizable market in the U.S. These ingredients are emerging because the Japanese MHLW has recently deregulated the ingredients from the drug to the food category.

L-Carnitine was deregulated by the MHLW in December 2002. Two years later, the market has reached $80 million. L-carnitine has been shown to be effective against a number of health problems including cardiovascular disease and diabetes, but its most well known application is for sports nutrition. Studies show that L-carnitine releases energy from fat and transports fatty acids into mitochondria to provide energy to cells. L-carnitine is limited to diet and sports nutrition applications in Japan. Several major food companies have launched L-carnitine containing diet drinks and sports beverages, and some predict that this market may grow to 130 million by the end of 2005.

Coenzyme Q10 (CoQ10) was deregulated in March 2001. Since then, the market has grown 150 percent a year, and now the market has reached $150 million. It is the fastest growing ingredient since glucosamine. Nisshin Pharma (Tokyo) is a pioneer in the field and a leading supplier. This market may reach $200 million by 2005.

MSM (Methyl-Sulfonyl-Methane) was deregulated from a drug to a food 3 years ago. About 10 companies are producing MSM-related products now, and the market is just under $50 million. MSM improves many health conditions, including allergies, asthma, skin problems, inflammation, stomach and digestive problems, but its most common use is for joint treatments. It has characteristics similar to glucosamine and chondroitin. In the next 3 years the market for MSM may grow to over $100 million.

Alpha lipoic acid (ALA) may prevent or treat age-related diseases from heart disease and stroke to diabetes and cataracts. Six months have passed since it became deregulated for food use, and It is too early to tell how well it will sell. Because of its wide range of possible application, the market may grow substantially in the next couple of years. Recently, The Health Industry News’ (HIN) contract manufacturers’ survey ranked ALA second for ingredient growth potential in 2005, right after CoQ10.

‘Amino acids’ is the most successful ingredient in recent history. It has been growing in double digits for the last 3 years and now is a $1.5 billion market of which 80 percent comes from sport drinks, the rest is from foods and supplements. Consumption of amino acid products soared especially in the wake of this summer’s Olympic games. This trend may continue for several more years.

Soybean peptide (SP) is a bonding of multiple amino acids and it absorbs in the intestinal more quickly and efficiently than ‘amino acids’. The product is said to help the body regain lost energy and produce energy faster than other amino acids. SP takes only 20 minutes to absorb in the body, making it useful for quick energy recovery. Since this study was published, several food and beverage companies have launched new products,and now the market is $80 million and growing 40 percent a year. Leading soy peptide manufacturers are working overtime to meet the demand and building production plants in Japan and overseas. Soy peptide will continue to grow next year and for several years beyond.

Taurin, glutathione and chondroitin sulfate are some of the potential ingredients that could be deregulated for food use near future.

Good Manufacturing Practices (GMP’s), the regulations that require a quality approach to manufacturing, enabling companies to minimize or eliminate instances of contamination, mix-ups, and errors have become a big topic among various industry organizations including JHNFA (Japan Health Food & Nutrition Food Association), NNFA Japan and CRN Japan. While GMP’s are necessary to win consumers’ confidence and ensure product safety, organizations are proposing different protocols. 70 percent of manufacturers agree to the implementation of GMPs and 43 percent of contract manufacturers have already implemented some type of GMPs according to a survey conducted by the HIN. The MHLW is expecting uniform recommendations from the industry to elect MHW’s guidelines.

FOSHU Overhaul
On May 26, the FOSHU overhaul panel concluded its 13th and final meeting and published its recommendation for the MHW for a new amendment of FOSHU. The industry expected to see DSHEA (the Dietary Supplement Health and Education Act of 1994)-like new regulations to govern and recognize dietary supplements. The recommendations were far from what was expected and were basically watered-down versions of current FOSHU regulations. The panel couldn’t ignore the $5 billion current FOSHU market. The recommendations were to create a second and third tier of FOSHU, one of which was tentatively called “FOSHU with Conditions (FWC).” FWC does not require as rigorous scientific evidence as current FOSHU does. Another recommendation was that products with ingredients that have been already formulated in the FOSHU category and have a proven, high level of scientific evidence and safety, can be classified as newly created and tentatively named, “Standardized FOSHU” products. The recommendations give a chance for many products that could not otherwise gain FOSHU status to do so. However, multiple FOSHU classifications may confuse consumers, but more importantly, the new recommendations from this panel lower the standard for FOSHU foods.

In November the MHW has published a preliminary report on new FOSHU regulations and is planning to conduct a public hearing within the month. The MHLW was going to announce the final amended regulation at the end of this year. As of today, MHLW has not yet announced any new FOSHU regulations.

For the last 12 months, 62 more products were approved and the end of this year, FOSHU market may reach 5.5 billion, up 10 percent from a year ago.

Consumer Confidence
The Ministry of Internal Affairs and Communications (MIC) has released a survey that showed that average family spending on nutritional supplements (MIC described them as natural health sustainable foods) increased 24 percent from last year. Manufacturers also indicate an 11 percent increase in sales in 2004 and are expecting sales to grow 8-10 percent in 2005. Nikkei, a leading economic newspaper, just published that employee year-end bonuses are up 3 percent from a year ago to $7,500. This is “the largest increase in over 7 years” according to Nikkei. All the indications of industry growth are in place. We just hope manufacturers are able to provide quality products to meet the demands of customers in 2005.

Have a happy, healthy and safe holiday.

His company publishes a number of Japanese nutrition market reports, including Nutraceutical Japan 2003, Nutritional Supplement Japan 2003. His latest report is Functional Foods and FOSHU Japan 2004, Market & Product Report. For details and Paul Yamaguchi is president of Paul Yamaguchi & Associates, Inc., Tarrytown, NY. information on the reports, visit: www.functionalfoodsjapan.com or contact Paul at [email protected]

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