23andMe is on the path to bridging the gap between genomics and pharmaceutical companies given the new business track and structuring taking place within the company. The genetic testing company that is known for using saliva swabs to provide consumers with personal health and ancestry data has overcome its previous set back from 2013 when the FDA ordered 23andMe to put a halt on disclosing health information relative to the potentiality of genetic mutations. It’s now looking to reinvigorate its subscription base, even as it evolves from being a consumer DNA tester to drug developer. How will the new business model fare? What’s next for the Silicon Valley innovator?
Jesse Williamson, Director at 9.8 Group said: “A pivot is a sure sign that management recognizes its business model needs to change. $115 million in new capital to an early-stage firm is a clear indication of belief in a business model. 23andMe is simultaneously looking to reinvent itself as a drug development company, even as it attempts to recapture momentum behind its core genetic testing business and the market stalks their existing offering and capabilities – Anne Wojcicki certainly has the dry powder to make it work, but does she have the right strategy and the ability to execute? I for one am looking forward to finding out!”
Theranos, another startup medical testing company, is going through the same FDA protocols as 23andMe boasting a shared strategy that may soon be revamped. The FDA, too, put a stop to administering blood tests openly on the market to consumers until regulatory approval for the company’s testing device is granted. By using testing methods comparable to diabetes testing, Theranos uses blood from a finger to determine proneness of diseases, extending from cholesterol to cancer, and applying a series of more than 240 tests to yield health results.
Accuracy of the results have been at the center of debate for both 23andMe and Theranos. As people plan for babies, the consumer has the opportunity to also seek medical opinion from doctors who can give separate “carrier tests” in search of genetic mutations, but cost savings will always remain a point of difference. Being able to accurately pinpoint the potential for health risks among testing methods has been a challenge and ultimately comes down to a matter of educating the population on the results.
From the consumer perspective Andy Bagnall, EVP Strategic Direction at Prime Access, recommends taking a measured approach to putting too much credence in the data just yet: "The healthcare industry is experiencing an unprecedented boom in innovation right now and anything that helps consumers better understand their health and risks so they can take appropriate action should be welcomed. The big word here is understand, so it's important that 23andMe take responsibility for ensuring that consumers are sufficiently educated and can trust in the information they are providing.”
The debate is going to continue to escalate as new health technology unfolds within a space that is ripe with innovation, but pharmaceutical companies like Pfizer and Genentech have already come on board to leverage health data from 23andMe and use it in research. From a new business model, will 23andMe become a model partnership that will drive further interest from other genetics enterprises to essentially become “startup” drug development companies that can repurpose raw health data for experimental compounds and enter the business of courting pharmaceutical companies? How much appetite will Big Pharma show to embracing the model?
Givi Topchishvili, Founder and President of the 9.8 Group, sees the new strategy as an indicator of the direction for the overall industry. "I believe the business model now implemented at 23andMe is an early prototype of industry standards in the next three to five years" he said. "They are putting genetic testing, diagnostics, and drug development under one roof. At the moment weakest link is the need to send your DNA sample to the lab. The amount of research that goes into development of a seamless and ongoing mobile health monitoring, and the appetite of investors to fund it, is a clear indicator that change is imminent.
Wearable devices are offering increasingly sophisticated degree of live data aggregation, that can then be transmitted to researchers and physicians. As we recently saw with Tesla’s launch of Autopilot and Google’s showcasing of RankBrain, AI machines are steadily gaining commercial use. What we will see in several years is birth of highly personalized, on-deman health care industry. A diabetic patient will be able to adjust the dosage of her medication based on the blood sugar levels she tested on her mobile device, sent wirelessly to a lab, which then analyzed the patterns using AI technologies. The lab will then produce updated recommendation, have a physician approve it via secure cloud system, and ship it out with next day delivery. Even seeing a doctor will become akin to ordering Uber – simple apps that match up your insurance data, health needs, and available local providers in real time.
This pattern will effect just about every industry as we know it. To stay relevant companies will need to adjust to a reality where technology empowers consumers, making sophisticated and highly personalized solutions a fundamental expectation from services they chose."