Genomics experts say this is a sign that clinical laboratory genetics testing is maturing into a powerful tool for population health

Faced with lagging sales and employee layoffs, genomics companies in the genealogy DNA testing market are shifting their focus to the healthcare aspects of the consumer genomics data they’ve compiled and aggregated.

Recent analysis of the sales of genetic tests from Ancestry and 23andMe show the market is definitely cooling, and the analysts speculate that—independent of the consequences of the COVID-19 pandemic on consumer behavior—the two clinical laboratory genetic testing companies may already have done testing for the majority of consumers who want to buy these tests.

“I think the consumer market is going to become more integrated into the healthcare experience,” Joe Grzymski, PhD, told GenomeWeb. “Whether that occurs through your primary care doctor, your large integrated health network, or your payor, I think there will be profound changes in society’s tolerance for using genetics for prevention.”

Grzymski is Chief Scientific Officer at Renown Health; Associate Research Professor of Computational Biology at Desert Research Institute, a research campus of the University of Nevada Reno; and Principal Investigator on a large population study called the Healthy Nevada Project.

Layoffs at Genomics Companies Come as No Surprise

In February, Ancestry, the largest company in the home DNA testing space, announced it was laying off 6% of its workforce or approximately 100 people, across different departments due to a decline in sales, CNBC reported. Several weeks earlier, 23andMe, the second largest company in this market, also announced it was laying off about 100 people or 14% of its workforce due to declining sales.

“I wasn’t surprised by the news,” said Linda Avey, a 23andMe co-founder who is now co-founder and Chief Executive Officer at Precisely Inc., a genomics company headquartered in San Francisco. She was commenting to GenomeWeb on the recent restructuring at her former company. “The level of expensive advertising has been insane here in the US. Those [customer acquisition costs] are not a sustainable model.”

CNBC surmised that the lull in at-home genetic testing is due mainly to:

  • A drought of early adopters. Individuals who were interested in the testing for genealogical and health reasons, and who believed in the value of the tests, have already purchased the product.
  • Privacy concerns. Some potential customers may have reservations about having their DNA information collected and stored in a database due to concerns about how that data is safeguarded and its potential uses by outside companies, law enforcement, and governments. 

COVID-19 May or May Not Be a Factor in Declining DNA Testing Sales

The COVID-19 pandemic may be playing a role in the decline in sales of at-home DNA testing kits. However, there are indications that the market was cooling before the virus occurred.

An article in MIT Technology Review reported that 26 million people had purchased at-home DNA testing kits by the beginning of 2019. The article also estimated that if the market continued at that pace, 100 million people were expected to purchase the tests by the end of 2020.

However, data released by research firm Second Measure, a company that analyzes credit and debit card purchases, may show a different story, reported Vox. The data showed a general decline in test kit sales in 2019. Ancestry’s sales were down 38% and 23andMe’s sales were down 54% in November 2019 compared to November 2018. The downward trend continued in December with Ancestry sales declining 15% and 23andMe sales declining 48% when compared to December 2018.

Second Measure, however, compiled data from the two companies’ websites only. They did not include testing kits that may have been purchased through other sources such as Amazon, or at brick and mortar locations.

Nevertheless, the measures being taken by genomics companies to shore up their market indicates the Second Measure data is accurate or very close.

Rise of Population-level Genomics

This decline in genealogical sales seems to be behind DNA-testing companies shifting focus to the healthcare aspects of consumer genomics. Companies like 23andMe and Ancestry are looking into developing health reports based on their customers’ data that can ascertain an individual’s risk for certain health conditions, or how they may react to prescription medications.

“We are seeing the next wave of maturity of the genetics market,” Othman Laraki, co-founder and CEO of Color Genomics, told CNBC. “If expensive diagnostic testing was genomics’ equivalent of mainframe computers, direct to consumer ancestry genetics was the hobbyist use. While the early adopter wave is petering out, we are seeing the real market (the equivalent of a PC in every home and a phone in every pocket), which is population-level use of genetics, taking hold.” (Photo copyright: San Francisco Business Times.)

For some genomics companies like 23andMe, the at-home DNA testing market was never specifically about selling testing kits. Rather, these companies envisioned a market where consumers would pay to have their DNA analyzed to obtain data on their ancestry and health, and in turn the testing companies would sell the aggregated consumer data to other organizations, such as pharmaceutical companies. 

“Remember that 23andMe was never in the consumer genomics business, they were in the data aggregation business,” Spencer Wells, PhD, founder and Executive Director of the Insitome Institute, a US-based 501(c)3 nonprofit think tank focused on key areas in the field of personal genomics, told GenomeWeb. “They created a database that should in principle allow them to do what they promised, which is to improve people’s health through genomic testing.” 

Even with clinical laboratory testing currently focused on COVID-19 testing, there remains an opportunity to sequence large numbers of people through at-home DNA testing and then incorporate those findings into the practice of medicine. The hope is that sales will again accelerate once consumers feel there is a compelling need for the tests.

Pathologists and clinical laboratory managers will want to watch to see if the companies that grew big by selling ancestry and genealogy tests to consumers will start to send sales reps into physicians’ offices to offer genetic tests that would be useful in diagnosing and treating patients.

—JP Schlingman

Related Information:

As Consumer Genomics Market Cools, Providers Ponder Better Ways to Reach Customers

Consumer DNA Testing Has Hit a Lull—Here’s How It Could Capture the Next Wave of Users

Layoffs at Genetic Testing Companies Reflect the Changing Market

Why DNA Tests are Suddenly Unpopular

More than 26 Million People Have Taken an At-home Ancestry Test

Ancestry to Lay Off 6% of Workforce Because of a Slowdown in the Consumer DNA-Testing Market