Local Pharmaceutical Firm Pivots & Diversifies amid Changes in Regulatory Business Environment
The local health food market has been growing in recent years, thanks to the rising health-consciousness of Hongkongers. The 17-year-old company Noble Health Co. Ltd has witnessed the evolution of the market, and its Managing Director Lily Mong, is optimistic about the momentum in future.
“People have become more concerned with their well-being since the pandemic, which also unleashed the strong spending power of Hong Kongers in safeguarding heath & wellness: many are willing to pay more than HK$1,000 for a bottle of NMN anti-aging supplements, or best-selling vitamins and probiotics. Also considering the huge market in China, we have every reason to believe in future industry development.”
One-stop Service for Drugs Trading
Began with selling pharmaceutical products, Noble Health is a licensed wholesale dealer registered at the Department of Health in Hong Kong, which has successfully registered more than 400 pharmaceutical products thus far. “The process of drug registration is very stringent; it usually takes 1 to 2 years for the authority to approve a new type of drug. Our rich experience has helped expedite the process to as short as 6 months.”
With an extensive sales network that covers 90% of local dispensaries, as well as some clinics and doctors, the company provides a full range of services from sourcing trustworthy pharmaceutical manufacturers, completing drug and trademark registration, OEM business, designing product packaging, to managing the logistics and warehousing.
Importing a huge amount of health food products, e.g. a million vitamin tablets, Noble Health will put them into different packages and labels before distributing to dozens of local dispensaries and dealers who will then set their own price to sell. “The American Chamber of Commerce often connects us with the U.S. manufacturers who wish to enter the Hong Kong and China market.”
Separate Regulations and Changes in HK and China
Misled by the geographic proximity of Hong Kong and China, foreign pharmaceutical companies often thought their products can be sold in both markets simply by working with Hong Kong dealers. Lily dismantled the misconception, “Besides having totally different regulatory systems on food and drugs in the 2 regions, Mainland China has a separate set of laws pertaining to healthcare products, and the requirements on registration, serving size, ingredients, etc. are all unique. Even when selling in Hong Kong, some overseas manufacturers and brands were unwilling to put in resources on brand building, and eventually failed to grow. We need to tell them it takes investment and efforts to enter into HK market.”
In 2016, the HKSAR Government re-categorised vitamins, glucosamine, and some other types of supplements from drug to food products, which implied that such products should be regulated under both the Trade Descriptions Ordinance and The Undesirable Medical Advertisements Ordinance. Such changes also caused product packaging valued at millions of dollars stored at Noble Health to become obsolete. “It is common for us to keep an ample stock level for our dispensary clients, but as we needed to follow the new ‘7+1’ nutrition labelling at that time, the old packaging had to be discarded. The new categorisation also meant that the drug registration processes are relaxed, thereby attracting a lot of international healthcare brands to enter the local market. As market demand soars, our sales have increased in spite of the intense competition.”
Excelling after Hard Lessons
Recognising the trend of globalisation, the company’s management team is keen to reinforce its competitiveness and decided to diversify their business model from OEM to building own-brand.
“We learned some hard lessons in the early days of launching our very own brand ‘YesNutri’: We had participated in many trade shows, but many of them couldn’t help in building our brand; our pharmacists are good at writing medical product descriptions and drug regulatory information, but they cannot help in sales & marketing. Things have worked out well since we restructured the team and hired nutritionists & professional marketers for our brand development, reinforcing our competitiveness as the market grows fierce.”
With Closer Economic Partnership Agreement (CEPA) announced by the HKSAR Government in 2003, cross-border trade has become vibrant, benefiting a lot of local businesses including YesNutri, in which the debut of its maternal and infant healthcare series had caught market attention. The brand now offers a total of 9 different series today, selling more than 200 individual products that cater the health and wellness needs of both genders at all ages. In addition to selling at drugstores chain, they have also listed their products on cross-border and local e-commerce platforms since few years ago, taking up about 10% of their retail income.
“Through our network of selected Current Good Manufacturing Practice (CGMP)-approved manufacturers in Europe, U.S., Australia and New Zealand, and a professional team of pharmacists and nutritionists who work closely with these manufacturers, we can research and develop new formula that is most suitable for Asians. We are also grateful to have received support and trust from the industry and our customers.” Awarded as “Consumer Caring Company” for 7 consecutive years since 2016, the company has hammered home the “customer-centric” values and delivered extraordinary buying experience to its customers.
Shortcut to the Mainland China Market
In face of the market volatility of China’s health food and drug market, Noble Health had encountered difficult situations: Even after overcoming customs clearance, permit application, listing, logistics and many other hurdles, the product sales have been stagnant due to a lack of promotions.
The company then turned to GS1 HK’s “HK Trusted Market” partner “WJH”, which not only helped YesNutri list on physical stores such as Walmart and China Southern Airlines, but also provided with promoters that yield decent results.
Despite the restriction on physical meetings during the pandemic, Noble Health banks on GS1 HK’s online and offline activities, such as “GEL” (GS1 Hong Kong Executive Luncheon) and GS1 HK Summit, to keep up to date with the latest market trends, network with industry experts and explore business opportunities. Lily agrees that digital and smart technologies are vital to the business, and she is looking forward to more solutions and services from GS1 HK that help enhance the company’s O2O business, open up new market and boost its competitiveness.