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A method for inducing reprograming of a cell of a first type which is not a non-hepatocyte (non-hepatocyte cell), into a cell with functional hepatic drug metabolizing and transporting capabilities, is disclosed. The non-hepatocyte is induced to express or overexpress hepatic fate conversion and maturation factors, cultured in somatic cell culture medium, hepatocyte cell culture medium and hepatocyte maturation medium for a sufficient period of time to convert the non-hepatocyte cell into a cell with hepatocyte-like properties. The iHeps induced according to the methods disclosed herein are functional induced hepatocytes (iHeps) in that they express I and II drug-metabolizing enzymes and phase III drug transporters and show superior drug metabolizing activity compared to iHeps obtained by prior art methods. The iHeps thus provide a cell resource for pharmaceutical applications.