From ugly duckling to K-beauty powerhouse: how derma cosmetics escaped the pharmacy

K-beauty has ignited a race in high-performance derma cosmetics. CJ Olive Young, one of K-beauty's dominant players, has launched a dedicated shelf section developed in partnership with pharmaceutical companies, while Musinsa Beauty has opened a store that houses an actual pharmacy. The age of derma beauty as a competitive differentiator has arrived.

According to industry sources on the 16th, derma beauty refers to high-performance cosmetics grounded in scientific and medical approaches to skin care — a concept rooted in dermatology. The category was once distributed almost exclusively through dermatology clinics and pharmacies, primarily for treating skin conditions or managing post-procedure recovery.

Pharmacy-style cosmetics first appeared on a domestic beauty platform in late 1999, when CJ Olive Young opened its first store in Gangnam-gu, Seoul. Of the store's roughly 330 square meters of floor space, about 82 square meters were devoted to a pharmacy, with beauty-related products — cosmetics, shampoos and the like — accounting for more than half of all merchandise. Billed as "Korea's first drugstore," the concept drew wide market attention but also triggered fierce resistance from the pharmaceutical industry.

The Korean Pharmaceutical Association protested loudly at the time, calling it a large conglomerate's encroachment on the pharmacy business. CJ CheilJedang, which operated CJ Olive Young, was even sued on charges of violating the Pharmaceutical Affairs Act. Ultimately, CJ Olive Young pivoted around 2008, shifting its focus to health and beauty — the H&B format — targeting women in their 20s and 30s, which is the model it follows today.

"Back then, the pharmaceutical association was showing signs of a boycott — it was closer to being an ugly duckling that couldn't coexist with the industry," one industry official said. Kolon WellCare, now known as Tissuegene, also launched a franchise pharmacy chain called W Store in 2004, but the venture never turned a profit and was eventually wound down.

Paradoxically, CJ Olive Young's push into H&B ended up nurturing the derma beauty category. As the company sought out emerging small and midsize brands to compete against the large conglomerate-backed beauty road shops of the time, domestic derma labels began landing on its shelves — starting with Dr. G in 2011, followed by CNP and Dr. Jart+. Word of mouth around these high-performance cosmetics spread quickly, and the category carved out a firm place in the domestic beauty market.

Derma beauty's growth phase began in earnest as K-beauty expanded onto the global stage. According to CJ Olive Young, sales of derma cosmetics to foreign customers at its offline stores grew roughly 90 percent between 2023 and 2025, and the category doubled year on year on its global online mall. Warehouse-style pharmacy chains — with names such as Doremi Pharmacy and Ready Young Pharmacy — have sprung up in prime commercial districts like Myeong-dong and Seongsu in Seoul. Foreign tourists visiting Korea have been adding these warehouse pharmacies to their itineraries alongside the so-called "Oldamu" trio of CJ Olive Young, Daiso and Musinsa.

Major players have now moved into full competitive mode, each building out their derma offerings. CJ Olive Young partnered with pharmaceutical companies and has been running a dedicated "Advanced Derma" section in 650 stores nationwide since late March; sales for that section in August were up 83 percent from April, when it launched. Musinsa Beauty installed Beauty Onnuri Pharmacy on the basement level of its Hongdae store — the first beauty franchise of the nationwide Onnuri Pharmacy chain, with about 90 percent of its roughly 2,000 products being beauty-related. Hyundai Department Store is set to open the first location of its derma concept store "Coord" on Friday, occupying about 165 square meters on the basement level of its Pangyo branch.

The pharmaceutical industry's attitude has also shifted. The Musinsa Beauty and Onnuri Pharmacy collaboration drew no backlash — if anything, observers say both sides have gained a powerful ally. Traditional pharmaceutical companies are also strengthening their derma beauty lineups: Dongkook Pharmaceutical's Centellian24 and Daewoong Pharma's Easydew are among the brands expanding their offerings.

According to global market research firm Fortune Business Insights, the worldwide derma beauty market is projected to grow from $52.59 billion this year to $117 billion by 2034. "Consumers who once bought beauty products by brand are gradually shifting toward seeking out specific products and specific ingredients from each brand — looking for high-performance solutions tailored to their individual skin concerns," one industry official said. "As each platform competes in the derma space, the market will expand rapidly."