Source: Yahoo Finance
2017 was the year that consumer DNA took off. 2020 might be the year that bubble bursts.
- In recent weeks, 2 of the genealogy bigwigs — Ancestry.com and 23andMe — announced plans to lay off hundreds of people.
- Other genetic sequencing companies like Veritas Genetics have struggled to raise funds. In Veritas’ case, they ceased operations in the United States and also laid off 50 people.
- Illumina (NASDAQ: ILMN), the biotechnology company that some refer to as the “backbone for genetic testing companies,” took a hit in 2019, after several years of consistent growth. They warn of short-term uncertainties in the DTC consumer testing market.
What’s going on?
- Ancestry CEO Margo Georgiadis cited in its announcement that the “entire DNA category” is seeing a slowdown in consumer demand. Others refer to the era of influence for these companies as a “DNA testing fad.”
- There are also privacy concerns, both on the part of companies and how they handle data and about people who can download consumers’ DNA sequencing. It may look like a bunch of ATGGGCTGAG on paper, but it’s also your biological blueprint. “You can cancel your credit card. You can’t change your DNA,” warns Matt Mitchell, the director of digital safety and privacy for Tactical Tech, an advocacy organization. Recode wrote an investigative piece on genetic testing, warning that it may even be a national cybersecurity threat. (And we did a deep dive on digital privacy last week.)
- It’s an increasingly competitive space. In addition to the industry leaders, as of 2018 there were approximately 75k “genetic tests” on the market.
These companies aren’t “cancelled”, but are facing an uphill battle. There’s a lot of catchup for privacy laws to reflect the relatively new DTC genetics space, so while the early adopters have already sent their saliva in to Anne Wojcicki, the remaining pool is getting tapped out, as others shy away due to privacy concerns. Companies, including Ancestry (which launched Ancestry Health last fall), are looking to focus on genetic health screening.