7 February 2020
Genetic testing companies 23andMe and Ancestry are laying off staff as sales of their DNA tests slump, but both are sitting on vast amounts of data from millions of their customers, which has the potential to deliver huge profits.
Since 23andMe launched in 2007, over 10 million people have signed up to the company’s services, while AncestryDNA says it has tested 16 million people.
But sales of DNA testing kits have been slowing over the last year and a half. Last month, 23andMe announced the company was laying off 100 members of staff – 14 per cent of the workforce. This week, Ancestry announced layoffs affecting 6 per cent of employees.
Why the slump? 23andMe CEO Anne Wojcicki told CNBC that concerns over privacy may be turning people off DNA tests.
Perhaps that is to be expected, given recent events. People who buy a genetic test can access the raw data of their results and upload them to other websites.
It was this kind of data, uploaded to a free website called GEDmatch, that enabled law enforcement agencies to track down a man thought to be responsible for decades-old murders and rapes, known as the “Golden State Killer”. By taking DNA from the crime scene and comparing it to those available on the site, agencies could identify the man’s relatives, and track him down from there.
Both 23andMe and Ancestry say the companies won’t willingly share genetic data with law enforcement agencies, but they may be forced to if given a court order. “It has the potential to spook people,” says Brad Malin at Vanderbilt University in Tennessee.
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There may be other reasons for the sales downturn. Perhaps the novelty of getting your DNA tested has worn off, and most of the people who would ever have wanted to buy one have already done so.
New technologies, riding a wave of hype, may fly off the shelves when they are first launched, only to later hit what one consultancy firm calls a “trough of disillusionment”, says Rachele Hendrick-Sturrup at Harvard Pilgrim Healthcare Institute in Boston.
Either way, it might not matter too much for these companies in the long run. Both are sitting on valuable, vast datasets, containing information on not only their customer’s DNA, but a suite of other personal details.
The data has its limits. Consumer genetic tests don’t tell people everything they need to know about their risk of disease, for example, and have been criticised for unnecessarily worrying some people and creating a false sense of security in others. And because most of the data the companies hold on their customers is self-reported, there is plenty of room for error.
But that doesn’t mean it isn’t useful – or profitable. In 2018, GlaxoSmithKline invested $300 million in 23andMe, giving the pharma giant access to “large-scale genetic resources”. And earlier this year, 23andMe sold the rights to a drug it had developed in-house – using customers’ data – to pharma company Almirall.
Ancestry may be heading in the same direction. The company launched a consumer DNA health report, similar to that of 23andMe, in October last year. And in 2015, Ancestry partnered with Calico – a Google-backed company – to study the genetics of human lifespan.
Even if people stopped sending their DNA to these companies, both have more than enough data to keep them busy, and in business. “They would probably look for new ways to leverage the data they have,” says Hendricks-Sturrup.
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