23andMe CEO Anne Wojcicki on Thursday announced the company is laying off 14% of its staff amid an industry-wide decline in sales of consumer DNA tests that has driven several companies in the industry toward other endeavors.
Slump in sales of consumer DNA tests
Sales of consumer DNA tests boomed in 2017 after FDA approved 23andMe's direct-to-consumer genetic tests. But last summer, the first signs of trouble in the DNA testing market emerged, when Francis deSouza—CEO of Illumina, a genetic equipment maker—during an earnings report noted a slowdown in sales across the industry. He said his company, which manufactures equipment for 23andMe and Ancestry, would take a "cautious view" of the ancestry and health test market going forward.
DNA testing companies respond to a slowdown in sales
Christine Pai, a 23andMe spokesperson, in an email to STAT News confirmed 23andMe is "restructuring" its consumer business, cutting about 100 jobs mostly from the company's operations team. Pai said layoffs will not impact the company's therapeutics business.
According to STAT News, 23andMe's layoffs offer a glimpse into the company's potential shift toward drug development based on genetic data collected from members. 23andMe earlier this month announced it had the rights to an antibody 23andMe developed using data from its DNA tests to the Spanish drugmaker Almirall. The antibody is designed to treat autoimmune and inflammatory conditions, including Crohn's disease and lupus. 23andMe tested the antibody in animals, but not humans. Emily Drabant Conley, 23andMe VP of business development, told Bloomberg the company might eventually conduct its own clinical trials instead of licensing compounds to other companies.
Other companies in the market appear to be shifting their business strategies, too. For instance, Illumina had initially planned to sell tests directly to consumers through a so-called "app store," but now it's looking for partnerships with providers. Meanwhile, Color Genomics, which has relationships with Apple and Jefferson Health, has begun to focus on its enterprise market, which sells DNA tests to companies and consumers (Brodwin, STAT News, 1/23; Farr, CNBC, 1/23).