Cosmetics and Quasi-Drugs

*Please note that the majority of references are in Japanese. This is due to accuracy and a significant lack of official documents available in English.
*Communication with regulatory authorities and other organizations is mostly in Japanese. Also, given the subtle nuances and business customs that are hard for non-Japanese to grasp, I recommend you to secure a local Japanese resident (even on a part-time or contract basis).

Certain consumer products can become cosmetics or quasi-drugs depending on what claims are made. Here, we will use sunscreen products as an example to explain.


Pharmaceutical Regulations: Cosmetics or Quasi-Drugs?

• All sunscreen products sold in Japan are subject to regulation under the "Act on Securing Quality, Efficacy and Safety of Pharmaceuticals, Medical Devices, Etc." (commonly known as: PMD Act).
• Based on this law, products must be classified as either "Cosmetics" or "Quasi-Drugs." This classification is the first and most crucial strategic decision for market entry. This is because this choice fundamentally determines the regulatory application process, the permissible marketing claims (indication of efficacy and effects), and the time and cost required to bring the product to market.
• kyotokesyouhinrihureto.pdf

Cosmetics

• Under the PMD Act, "Cosmetics" are defined as "articles intended to be used by rubbing, sprinkling, or other similar methods, on the human body for cleaning, beautifying, increasing attractiveness, altering the appearance, or keeping the skin or hair in good condition, and whose action on the human body is mild." When selling sunscreen as a cosmetic, the procedure is a relatively simple "notification system," allowing for a speedy market launch. However, the efficacy and effects that can be displayed are strictly limited to mild expressions such as "moisturizes the skin," "conditions the skin texture," and "prevents spots and freckles caused by sunburn." Even if active ingredients are included, it is not possible to claim more significant effects like "whitening" or "wrinkle improvement." Additionally, there is an obligation to display all ingredients on the container.

Quasi-Drugs

• On the other hand, "Quasi-Drugs" are products containing active ingredients approved by the Ministry of Health, Labour and Welfare (MHLW) at a certain concentration for a specific purpose (e.g., preventing acne, preventing rough skin, whitening, etc.). This makes it possible to display more specific and persuasive efficacy and effects on the product packaging and in advertisements, which is not possible for "Cosmetics." For example, claims such as "suppresses the production of melanin, preventing spots and freckles" (whitening effect) or "improves wrinkles" become possible, strongly appealing to consumers seeking high functionality. However, the trade-off is the need to obtain "approval" from the Minister of Health, Labour and Welfare for each item before market launch. This process is significantly more complex, time-consuming, and costly compared to the notification for cosmetics. The approval application requires the submission of documents detailing data on the product's quality, efficacy, and safety.

Comparison of Cosmetics and Quasi-Drugs
Cosmetics

• Regulatory Procedure: Notification to the prefectural governor
• Time to Market: Short period
• Permissible Claims (Efficacy/Effects): Limited to a mild range (e.g., "moisturizes the skin")
• Ingredient Regulations: Compliance with Cosmetic Standards. Positive/Negative lists exist
• Labeling Requirements: Mandatory full ingredient labeling
• Strategic Significance: Suitable for rapid market launch, mass-market products

Quasi-Drugs

• Regulatory Procedure: Approval by the Minister of Health, Labour and Welfare
• Time to Market: Long period
• Permissible Claims (Efficacy/Effects): Specific effects within the approved scope (e.g., "suppresses the production of melanin, preventing spots and freckles")
• Ingredient Regulations: Must contain approved active ingredients at specified concentrations. Regulations also apply to additives
• Labeling Requirements: Mandatory labeling of active ingredients and other designated ingredients
• Strategic Significance: Suitable for high-functionality/high-value-added claims, premium products, products addressing specific skin concerns

Business Licenses
Regardless of the product classification (cosmetic or quasi-drug), businesses launching products on the Japanese market must obtain two main types of business licenses.

Marketing Authorization Holder - MAH License
This is a license granted to the business operator (primary distributor) who bears the final responsibility for the quality and safety of the product in Japan. The MAH is obligated to decide on the shipment of products to the market and to establish and maintain systems for post-marketing safety management (GVP: Good Vigilance Practice) and quality assurance (GQP: Good Quality Practice). This license is applied for in the prefecture where the business office is located.

Manufacturer License
This is a license granted to each manufacturing site that performs part or all of the product's manufacturing process. In the case of products imported from overseas, the location in Japan where work such as affixing Japanese labels, packaging, or storing the product is performed is considered a "manufacturing site," and this license is required. Even if the product is finalized overseas, this license is mandatory as long as labeling work for sale in Japan is performed. The licenses are divided into categories such as the "Packaging, etc., Category" for packaging, labeling, and storage only, and the "General Category" which includes a wider range of manufacturing activities.


Market Entry Methods for Overseas Companies
Establishment of a Japanese Corporation

• Establish a corporation in Japan, hire qualified personnel including a General Marketing Compliance Officer (Soukatsu Seizou Hanbai Sekininsha), and obtain the MAH license directly. This method has the significant advantage of allowing complete control over operations in the Japanese market, but it requires a large initial investment, securing personnel, and a long time to obtain the license, making it impractical, especially for small and medium-sized enterprises.

Outsourcing to an MAH (or DMAH)

• For both cosmetics and quasi-drugs, it is preferable to entrust all regulatory affairs to a third-party company in Japan that already holds the appropriate MAH license.
• In the case of quasi-drugs, utilizing a DMAH (Designated Marketing Authorization Holder) is the most efficient. This is a system where an overseas manufacturer without a business office in Japan uses the "Foreign Exceptional Approval System" to become the approval holder themselves (Accreditation Holder of Foreign Manufactured Drugs, etc.) while having a DMAH handle the domestic regulatory compliance on their behalf. This method allows for rapid and low-cost market entry, making it a realistic and effective option for many overseas companies.
• Regarding Applications for Accreditation/Registration of Foreign Manufacturers of Pharmaceuticals, etc. (Pharmaceuticals, Quasi-drugs) | Pharmaceuticals and Medical Devices Agency (PMDA)

Recommended Approach

• First, it is recommended to discuss whether your product should or will be a cosmetic or a quasi-drug from a regulatory perspective at a consultation service of a public institution.
• In the case of consumer goods, consideration of distribution and marketing aspects is also important. In Japan, distribution is complex, and consumers have high brand loyalty, creating significant barriers for small and medium-sized enterprises to compete with large corporations. The pace is also much faster than for prescription drugs, so advice from experienced experts is helpful.
• Once the direction is set, it is advisable to search for a regulatory affairs consultant, consulting firm, or a direct Marketing Authorization Holder.
• For overseas companies, it is a good idea to start by hiring a Japan-based consultant or contract employee.

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＠K.Kamitani