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6% of GDP.
Competition
There are several local manufacturers of vitamins in South Korea. Consumers in this country favor local manufacturers. This is because their prices are obviously lower than the prices of international vitamins exporters to South Korea. Another reason for which local manufacturers are preferred over foreign ones consists in the attachment of local consumers to national brands.
However, there is still room for new companies exporting their products on the South Korean market. This market sector is currently in full growth and development process.
Product Specific Regulatory Considerations
Government regulation
Vitamins are considered to be dietary supplements and are not legally treated as drugs, but as foods. This classification attracts several consequences regarding the management of this activity. For example, vitamins' producers are entirely responsible for the safety of these products, and not the government.
This situation has further effects. In comparison with drug products' situation where their safety and efficiency must be proven before reaching consumers, in the case of vitamins "there are often no provisions to approve dietary supplements for safety and effectiveness before they reach the consumer" (Wikipedia, 2009).
Vitamins testing requirements
Regarding the testing of dietary supplements, the process is not different from the testing process of foodstuffs. As mentioned above, vitamins are part of the food category and the legal requirements applied in the case of food products are applied in the case of dietary supplements, including vitamins.
Tariffs
Given the fact that vitamins, just as other dietary supplements, are part of the food category, the same tariff policies applied to food products are applied to vitamins also. In such cases, the market is the factor that regulates prices.
The pricing of vitamins is subjected to the factors of influence of the market in case. These factors include: number and size of competitors, number of consumers, economic development level of the region in case, the size of the market, trends...
Any modifications of these factors have a direct or indirect influence on the prices of vitamins.
Influence of regulatory considerations on the pricing of vitamins
The new system of classification for medicines in South Korea has a direct significant influence on the market's evolution in this country. This means that "sales of OTC healthcare products in South Korea amounted to $1.1 billion in 2002, making it the Asia Pacific's region's second most important national market after Japan, and ahead of China's OTC market value" (Decision News Media, 2003).
The fact that vitamins are considered part of the foods category and not as being drugs, has a significant indirect influence on the pricing of such products. For example, vitamins can be sold in non-pharmacy outlets. This situation allows manufacturers to expand their geographical area they address, which leads o an increased number of customers. Increasing the customers base may lead to reduced prices for vitamins.
The availability of the product directly influences its consumption. The more available a product is, the more its consumption is likely to increase. This also leads to reduced prices. Also, regulation regarding vitamins being treated as food products allows for many producers to exist on the market. Increased competition has direct influence on the pricing of the product by reducing consumers' price.
Reference list:
1. Introduction (2009). The Merck Manuals. Online Medical Library. Retrieved April 26, 2009 from http://www.merck.com/mmhe/sec12/ch154/ch154a.html.
2. South Korea (2009). Central Intelligence Agency. The World Factbook. Retrieved April 27, 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html.
3. Vitamin (2009). Wikipedia, the free encyclopedia. Retrieved April 27, 2009 from http://en.wikipedia.org/wiki/Vitamin.
4. Vitamins driving South Korean OTC market (2003). Decision News Media. Retrieved April 27, 2009 from http://www.nutraingredients.com/Consumer-Trends/Vitamins-driving-South-Korean-OTC-market.
Reference list:
1. Introduction (2009). The Merck Manuals. Online Medical Library. Retrieved April 26, 2009 from http://www.merck.com/mmhe/sec12/ch154/ch154a.html.
2. South Korea (2009). Central Intelligence Agency. The World Factbook. Retrieved April 27, 2009 from https://www.cia.gov/library/publications/the-world-factbook/geos/ks.html.
3. Vitamin (2009). Wikipedia, the free encyclopedia. Retrieved April 27, 2009 from http://en.wikipedia.org/wiki/Vitamin.
4. Vitamins driving South Korean OTC market (2003). Decision News Media. Retrieved April 27, 2009 from http://www.nutraingredients.com/Consumer-Trends/Vitamins-driving-South-Korean-OTC-market.
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