Investing in Japan
Pierre Fabre Dermo-cosmétique Japon Co., Ltd.
Industry： Biotechnology / Life science
As a Japanese subsidiary of Pierre Fabre, a leading French manufacturer of pharmaceutical products and dermatological cosmetics, Pierre Fabre Dermo-cosmétique Japon has established its first R&D center outside France, Asia Innovation Center PFDC, in Tokyo to develop products targeted at Japanese and Asian markets. “Avène Hydrance Water Gel-in-cream” an all-in-one moisturizing gel in the company’s basic skin-care product line developed by this center has registered a sales volume of 250,000 in a half year and is opening up Asian markets.
Pierre Fabre Dermo-cosmétique Japon Co., Ltd. (“PFDCJ”), a Japanese subsidiary of Pierre Fabre, a leading French manufacturer of dermatological cosmetics, has opened its first R&D center outside France, Asia Innovation Center PFDC in Tokyo. Coinciding with the relocation of the Japanese subsidiary, PFDCJ began research and development at full capacity at its new office (located in Hatsudai, Shinjuku-Ward, Tokyo) in January 2016.
Opening up overseas markets by emphasizing “Made in France”
Pierre Fabre, the third ranked pharmaceutical company in France, focuses on the research, development and manufacture of biologically active ingredients derived from natural sources, and is one of Europe’s leading companies in dermatological cosmetics. It owns 25 locations and employs 1,200 researchers in France, manufacturing 98% of its products domestically. Pierre Fabre is expanding its business globally with products currently being sold in 130 countries around the world. It has 44 subsidiaries overseas with one third of its entire workforce, about 10,000, employed outside France. Of the approximately 280 billion yen of aggregated sales for FY2014, overseas sales accounted for 56%. In particular, the cosmetics business, which is Pierre Fabre’s main branch of operations, amounted to 54% of its total sales with a leading position in the cosmetics market in France.
30th anniversary of Japanese subsidiary
Pierre Fabre has a long history with Japan, dating back to 1986, when it established Pierre Fabre Japon Co., Ltd. (“PFJ”) as a joint venture with Shiseido to import and sell skin-care products.
Pierre Fabre also set up PFDCJ in 2002, its wholly-owned subsidiary, to undertake sale of the group’s cosmetics brands other than Avène and to initiate local product development. Since the commencement of Pierre Fabre’s operations in Japan, “Avène” mainly sold by PFJ under the category of dermatological cosmetics for consumers, and “René Furterer,” sold by PFDCJ under the category of hair-care products for professional use, have built a strong reputation as main products.
“Japan is very special to Pierre Fabre Group,” said Laurent Martin, President of PFDCJ. The year 2016 marks the 30th anniversary of the founding of Pierre Fabre’s subsidiary in Japan, which reflects the development of its globalization. “Pierre Fabre’s globalization started from Japan. Among overseas markets outside Europe, it was in the Japanese market that Pierre Fabre succeeded for the first time,” continues Mr. Martin. Pierre Fabre had a hard time in responding to Japanese consumers’ demand because of their detailed requests, but answering such needs enabled Pierre Fabre to establish the global standards for its entire group. “Our staff has the impression that our history in Japan has brought Pierre Fabre its current success in the global market,” said Mr. Martin.
“Avène,” one of Pierre Fabre’s prominent skin-care brands
Background of Asia Innovation Center PFDC’s establishment
PFDCJ now has 29 employees, of which six are researchers, and they engage in the development of products targeted at Japanese and Asian markets as well as sales of hair-care products for professional use. The company opened the Asia Innovation Center PFDC, which was Pierre Fabre Group’s first overseas R&D center outside France, in Japan in 2014. “Although we had been developing products for the Japanese market at laboratories in France, it was difficult to explain the meanings of words such as sara-sara (a smooth, dry texture) and shittori (a moist texture) to French staff. It was also difficult to make the staff understand textures that Japanese people prefer and the way Japanese people use cosmetics,” Mr. Martin recalled. Pierre Fabre then judged that local research and development would be vital to create products that could meet Japanese consumers’ needs, and this judgment led to the establishment of the R&D center in Japan.
Pierre Fabre had wanted an R&D center in Asia as it had expected future growth in Asian skin-care product markets. In addition to Japan, it had also studied the possibility of making Singapore or China the location of its Asian R&D center. In terms of cost, Japan was inferior to the other two countries. However, the following point mattered the most: “In Japan, we have relationships of trust with Japanese companies, strong networks with cosmetics-related contract manufacturers and ingredient manufacturers, the know-how in the production of cosmetics, and a sense of speed for product development that Pierre Fabre has nurtured over the last 30 years.” Mr. Martin went on to say, “Under the brand of Avène, we sell cosmetics developed by using the functions of hot springs in the village of Avène located in southern France, and we pitch the point that it is ‘made in France.’ When we thought about where we could manufacture the products under this brand outside France, Japan came up because Japan is reliable in terms of quality.”
Laurent Martin, President of PFDCJ
Avène Hydrance Water Cream-in-gel, the first product of which the Asia Innovation Center PFDC has been involved in terms of product development, has adopted the texture and way of use that Japanese consumers prefer. It has become a hot item with a sales volume of 250,000 in the half year since its release in May 2015. Although not pitched as “made in Japan” through its marketing, this product is quite popular with Chinese tourists coming to Japan as well. The company plans on releasing it in Korea and Taiwan in 2016, and in China in 2017. “There is a way to promote business growth in Asia by utilizing the advantages of Japan. We consider it to be an objective of the Asia Innovation Center PFDC,” Mr. Martin said.
PFDCJ is now placing the highest priority on hair-care products for professional use. Its new office is fully equipped with a studio and a seminar room where training sessions about how to use the products can be held. PFDCJ said it would like to open this kind of facility in Kansai and Kyushu regions to expand this business.
Pierre Fabre excels in hair-care products in the French market, including scalp care for new hair growth. In Japan, these products are treated under the category of quasi-drugs because of regulations and laws. However, PFDCJ expects these products have potential, and is planning to increase the number of researchers from six to ten in 2016. “We would like to develop new products at the Asia Innovation Center PFDC to further expand the hair-care line in the future,” Mr. Martin said.
Studio for demonstration experiments with hair-care products
When PFDCJ opened its R&D center in Japan, JETRO provided information including incentives as well as consulting services for formulation of employment rules and the Japanese taxation system.
According to Mr. Martin, French governmental organizations have multiple contact windows, which complicates procedures for setting up new business in many cases. In this regard, “It was simple and easy to contact JETRO, and JETRO was helpful in obtaining organized information including what kind of support we could receive when establishing a R&D center,” Mr. Martin commented.
(December 2015 interview)
|1951||Founded in Castres, Southern France|
Established Pierre Fabre Japon Co., Ltd.
as joint venture with Shiseido Company, Limited
|2002||Established Pierre Fabre Dermo-cosmétique Japon Co., Ltd.|
|April 2014||Opened “Asia Innovation Center PFDC”|
Pierre Fabre Dermo-cosmétique Japon Co., Ltd. (Japanese subsidiary)
|Address||26F, Tokyo Opera City Tower, 3-20-2, Nishi-Shinjuku, Shinjuku-Ward, Tokyo|
|Business||Development and sale of hair-care products for professional use, development of dermatological cosmetics targeted at Asian markets|
|Parent company||Pierre Fabre S.A.|
|Capital||601.1 billion yen|
|Employees||29 (as of December 2015)|
Overview of Asia Innovation Center PFDC
|Purpose||Strengthening development of Pierre Fabre Group’s products targeted at Asian markets Date of|
|Establishment||Established in April 2014, began full-capacity operation from January 2016|
|The amount of investment||About 100 million yen|
|Gross floor area||About 280 square meters|
|Number of employees||6 (as of December 2015)|
- Provision of information on incentives
- Provision of consultation on tax and labor laws