IL-YANG PHARM withdrew from stores just 5 days after launching health supplements (functional foods) at Daiso. This was due to strong backlash from pharmacists, who argued that releasing Daiso's functional foods at low prices fueled misunderstandings that pharmacies had been exploiting consumers. The pharmaceutical industry analyzed that, while pharmacists are ostensibly citing price differences to block the entry of functional foods into Daiso, the real motivation is to gain control of the offline distribution market.
Beginning on the 24th of last month, Daiso started selling functional foods from IL-YANG PHARM and Daewoong Pharmaceutical in 200 locations nationwide. Daewoong Pharmaceutical launched a total of 26 products, while IL-YANG PHARM launched 9. Chong Kun Dang also announced its entrance into Daiso this month, drawing significant consumer interest. Given Daiso's low pricing policy, the monthly cost of functional foods is set between 3,000 and 5,000 won, making it very inexpensive compared to products sold in pharmacies and online malls.
Pharmacists objected strongly to the sale of functional foods in Daiso. The Korean Pharmaceutical Association issued a statement on the 28th of last month, saying, "We strongly condemn pharmaceutical companies marketing their products at lower prices to lifestyle goods stores compared to pharmacies." Pharmacists claimed that pharmaceutical companies intentionally hide the differences between pharmacy products and products sold at Daiso, leading to misunderstandings that pharmacies are selling products at high prices.
As arguments arose within some pharmacists' communities advocating for a boycott of the pharmaceutical company supplying functional foods to Daiso, IL-YANG PHARM pulled out of the Daiso market. Daewoong Pharmaceutical and Chong Kun Dang are also reportedly reconsidering their positions in the Daiso market.
According to pharmacists, functional foods sold in pharmacies and online differ in ingredient content from Daiso products, or in cases where the ingredients are the same, pharmacy products are actually cheaper.
For IL-YANG PHARM's "Home Day Calmag manganese product," the ingredients are the same for both the existing product and the Daiso version, but the prices differ significantly, at 25,000 won to 30,000 won for the former and 5,000 won for the latter. However, the Daiso product has a dosage that is only one-sixth of the existing product, leading to a price per tablet of 69 to 83 won for the existing product, while the Daiso product is priced at 83 won, making the existing product cheaper.
In cases where Daiso products are cheaper, there are differences in the composition and content of the ingredients. The Daiso vitamin product "All Day Vitamin C 1000mg" is priced at 3,000 won, while its counterpart from the same company, "Comfortable Vitamin C Premium," costs between 25,000 and 30,000 won. The price per tablet is also 100 won for the Daiso All Day Vitamin C 1000mg, while the Comfortable Vitamin C Premium product is 200 won, making it about twice as expensive. In contrast, the Daiso product only contains vitamin C as the main ingredient. The products sold in pharmacies include several nutrients, along with vitamin C, such as vitamin D and zinc.
From the pharmacy's perspective, there is no reason to feel inferior to Daiso regarding ingredients or prices. Moreover, the proportion of sales from functional foods in pharmacies is small. According to the Korea Health Supplements Association, the functional food market size is about 6 trillion won, with online sales accounting for 70%, while pharmacies represent only 3 to 4%. Most functional foods sold in pharmacies are customized products tailored to patients' conditions, which suggests that the pharmacy's share of general functional food sales is likely to remain around 1%.
Nevertheless, the pharmacy sector's opposition to the entry of functional foods into Daiso is viewed by the pharmaceutical industry as an intention not to lose control of the offline market. In fact, the pharmacy market was completely depressed when hair dye, once sold in pharmacies, began being sold at Daiso. A pharmaceutical industry insider noted, "Considering the current functional food situation and the previous hair dye incident, it seems that the pharmacy sector is reacting more sensitively to offline markets like Daiso than to the already established online market."
This movement within the pharmacy industry seems greatly influenced by the nature of functional foods. Although most functional foods are sold online, the characteristic of purchasing multiple products at once makes offline stores like large supermarkets and pharmacies an essential market not to be overlooked.
In particular, many consumers purchase other products while buying functional foods. A pharmacist operating a private pharmacy in the metropolitan area remarked, "Functional foods do not account for a large share of total pharmacy sales, but most regular customers come to buy them," adding that "if functional foods become available for purchase at Daiso, it is evident that pharmacy customers will leave in droves."