Cosmeceuticals in China

Although the term “cosmeceutical” is difficult to define, products claiming to be cosmeceuticals are increasingly found on the shelves of drugstores and personal care stores throughout China, such as Watsons. Chinese consumers often relate this type of products with better safety and efficacy, although what they expect and what they actually get might be disjoined.

Although there is no clear-cut definition for cosmeceuticals, which in general refer to cosmetic products with drug-like benefits, China is expected to move into this market in a bold way, since consumers here are prepared to pay extra for premium products with better safety and efficacy. With the rise of a more knowledgeable, wealthy and beauty-conscious class of urban consumers, cosmeceuticals have come a long way in recent years to become one of the fastest-growing cosmetic options.

While there are few consolidated statistics for the cosmeceuticals market, the latest Euromonitor report on China medicated skin care can give us some clues about what’s going on in this area. Classifying medicated skin care into different treatments for skin diseases such as acne, skin allergy and hair loss, the report covers the subcategories that can be regarded as cosmeceuticals. According to the report, medicated skin care accounts for 21% of total OTC market size, and 2010 sales rose 10% to nearly $1.1 billion. Due to the growing population as well as growing awareness of self-medication, sales are expected to reach nearly $1.6 billion in 2015—a CAGR of 8%.

In contrast, although hair loss treatments and acne treatments account for small shares of the medicated skin care segment, they experienced the fastest growth from 2005 to 2010, representing CAGRs of 17.2% and 14.2%, respectively, during that period. This reflects the fact that the cosmeceutical market is presently dominated by these two subcategories of cosmeceuticals. However, injectable and other key subcategories, such as tooth whitening, lip protection and anti-aging, are also boosting profits for cosmetic companies, as new research into ingredients such as stem cells and nanomaterials are changing the face of cosmeceuticals.

Regulatory Dilemmas

While the generally understood definition of cosmeceutical is a cosmetic with some medicinal benefit, it is important to realize that there is no such term as cosmeceutical under the current regulation in China. Industry members and consumers may have their own definition, but the most important thing to remember is that government officials and professional institutions don’t have their own definition.
Although most industry experts think that it is important to first establish what cosmeceuticals mean, regulators have already taken action. Ever since taking charge of the administration of cosmetics back in September 2008, the State Food and Drug Administration (SFDA) has issued several drafts of the Regulations and Guidelines on Naming of Cosmetics for comments. According to these drafts, any medical term or other word implicating or explicating any medical effect or function is not allowed in cosmetics naming. As a result, those marketing terms currently found on the labels and descriptions of products claiming drug-like effects, such as “cosmeceutical,” “medicated skin care” and “prescription,” are illegal under these upcoming regulations.

These draft regulations and guidelines have gone through many amendments in recent years. In the version proposed in July 2009 by SFDA, the terms “Chinese Medicine,” “Chinese Herbal Medicine” and any other related to Chinese traditional medicine were forbidden to be used on cosmetic names and marketing. But this has caused a huge debate, especially among those domestic manufacturers relying heavily on TCMs to differentiate themselves from internationNike Air Max 270