Why 23andMe is no longer leading on personal genomics

23andme_logoI really admire what 23andMe has done. To a great extent they are the “Uber” of DTC personal genomics. FamilyTree DNA really pioneered the sector in the early 2000s, while The Genographic Project scaled things up massively in the middle 2000s. But in the late 2000s 23andMe brought Silicon Valley “disruption” to the game, pushing into disease and traits in a way that both the two earlier efforts consciously avoided. We know how that ended.

But it wasn’t all in vain. 23andMe is today a healthy company, and its shoot-first-ask-questions later actions in the first half of the teens really brought personal genomics into peoples’ lives.

So what’s going with stories like this, 23andMe Has Abandoned The Genetic Testing Tech Its Competition Is Banking On:

For years, genetic-testing startup 23andMe was working to develop a cutting-edge technology that could dramatically expand what its customers might learn about their DNA. While the company’s core product, a $199 “spit kit,” can tell you about your health and ancestry based on small bits of your genetic code, tests based on the new technology — called next-generation sequencing — could provide much more comprehensive information, including your potential risks for many diseases.

But 23andMe has given up on the technology for now, BuzzFeed News has learned.

I think one way to understand what’s going on is that though the firm’s consumer face is still as a DTC personal genomics outfit, it is really banking on becoming a genetically savvy pharmaceutical corporation. Genomics is the future, but pharm is the present.

51cz5E2hKTL._SX378_BO1,204,203,200_23andMe probably has ~1.5 million genotypes now. They’ll confirm more than 1 million. If they had more than 2 million I assume they would tell us they did. What are they doing with those genotypes? It was always understood by most that 23andMe was increasing its database to the point where they could generate associations that academics could not because of lack of statistical power. The problem now, with more than 1 million genotypes, is that they need phenotypes.

It is much more valuable for 23andMe to get rich data on one customer, than it is to gain one hundred more random genotypes. That’s probably why they’re not sweating that the $199 price point discourages people, especially when those people are getting less than they did in the past. That’s also why they are pulling out of the game in next generation sequencing. Sequencing is basically a commodity business now, and just not as good a return on investment as gearing toward the pharmaceutical market. Sequencing deeply has some benefits, but there is no way 23andMe would be able to subsidize the $1,000 cost of a good 30x genome to get enough of a sample size to return the investment.

None of this is a big secret. A friend of mine was talking about this in the broadest sketches at the 23andMe party at ASHG.

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