Legal considerations while starting a supplements business?


1

I've been contemplating starting a brain supplement product similar to Onnit's Alpha Brain.

The supplements industry is ridiculously de-regulated (thanks Utah). Literally anyone can contract a manufacture and hand them a mix of natural ingredients to get in business.

What legal considerations I should keep in mind before venturing out in such a business? Can a supplement's formula be patented?

Legal Manufacturing Lawyer Supplements

asked Feb 3 '14 at 17:16
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Lyle Guerrero
6 points
  • Each state has it's own regulations, so something you should look into as well. Utah as you mentioned does seem to be business friendly: http://goo.gl/nCF6KSNishank Khanna 4 years ago
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2

With any ingestible product, you'll always be taking on more risk. Tim Ferris' first startup was a brain supplement as well, BrainQuicken if I recall correctly.

The biggest key in such a business is finding the right manufacturer. Two things you need to look at:

  1. Does the manufacturer provide liability insurance that covers you for the capsules they make (most do -- you need to check how much coverage their insurance provides you).
  2. Read reviews on the manufacturer. There are numerous forums and trade sites that have reviews on specific manufacturers from other entrepreneurs like you.

From a quick google search, I see a few provide insurance that'll cover you: Now Foods, Nutricap Labs, Vitalabs

Apart from the insurance, keep these things in mind as well:

  • You must be 100% accurate on your labels in terms of the ingredients and quantity of each ingredient. There is a loop hole that most supplement brands use (abuse to be honest) -- it's called Proprietary Blend. Basically you can list all your ingredients under a "Proprietary Blend" heading and that allows you not to list the exact quantities of each. Some use that to genuinely protect their formula, but most use it as "label decoration". i.e. they'll put in 1mg of a popular ingredient even though that quantity has no effect.
  • Ensure you marketing copy isn't pushing the line. Supplements are a gray area where you should try to be as accurate as possible in terms of what benefits they provide. Why? Because if you claim benefits the customer doesn't see, you'll have one-time purchase customers. That's not a sustainable business model. You want to create a product where people will buy your supplement every month and generate recurring revenue for you.
  • You must mention Dietary Supplement on the front of the label. This is an FDA requirement. Don't forget it when you're designing the label or contracting someone to design it for you.

This is a very high margin business, but the key, like all businesses is branding and marketing. Create a genuine product backed by medical research and it's possible to generate a large amount of revenue very quickly.

Here is a video interview of a UCBerkley student who sold $500,000 worth of supplements on Amazon in a matter of a week (after some fad supplement was mentioned on the Dr. Oz show) and now runs a successful supplements business where he has created his own brand (like you intend to):

http://www.youtube.com/watch?v=dEFJ1qO6NN4

answered Feb 3 '14 at 17:33
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Nishank Khanna
4,253 points

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