23andMe lays off 100 employees, struggling to generate sales

23andMe just sold the rights to a drug it developed with genetic testing data from its customers.

On Thursday, 23andMe announced it is laying off 100 people. The home DNA-testing company has struggled to maintain sales, forcing leadership to cut 14 percent of staff. The layoffs impact members of the operations team who were trying to scale the business, as well as individuals within a few other groups.

To right the ship, 23andMe will hone in on its therapeutics and direct-to-consumer lanes, as well as pull back on clinical studies. Until now, the company has been able to invest in drug development with its massive database of DNA samples. However, it appears the short-term focus will be on getting new customers on board.  

CEO Anne Wojcicki is not exactly sure why people are shying away from DNA testing at this point. “This has been slow and painful for us,” says Wojcicki. However, pulling back is “what the market is ready for.”

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23andMe’s Rollercoaster Existence

Anne Wojcicki founded 23andMe in April 2006. The company burst onto the scene and grew quickly, thanks to over $780 million in venture capital. Wojcicki struck up partnerships with GlaxoSmithKline and research groups to fuel growth and customer acquisition.

In 2013, 23andMe hit a slight bump in the road when the FDA conducted a regulatory probe into the company. Wojcicki and the team were able to move past the incident in 2015 and resume selling health and ancestry products. Over the next several years, 23andMe enjoyed hyper-growth. 

Using only a home-based saliva collection kit, 23andMe can tell people what foods they like and dislike, which biological traits they possess. The company can also share what predispositions people have for certain genetic conditions and disorders like sickle cell anemia and cystic fibrosis.

Growth Slowing in 2020

23andMe’s slowdown began in 2019. Last summer, Francis deSouza of the DNA sequencing machine-maker, Illumina, reported that the entire sector was down, alerting the public of potential long-term issues. Consequently, his company decided to take a “cautious view” of the overall genetic testing ecosystem.

Organizations like Veritas Genetics and Color Genomics have responded in different ways. The former decided to close its U.S. operations, while the latter is raising capital to go after the enterprise market. Color Genomics thinks there is significant opportunity in working directly with companies rather than marketing to consumers. 

Wojcicki isn’t exactly sure what killed 23andMe’s momentum. She believes some factors, such as privacy concerns and pessimism around the future of the economy, might be influencing customer decisions. People are more sensitive than ever about their personal information, which is why DNA testing may not be popular right now.

23andMe test costs are not cheap. For $99, users get an ancestry report, family tree builder, and a relative finder. For another $100, they get information on their health and wellness. At $499, the VIP pack includes a first-in-line perk and a 1-on-1 walkthrough of results. 

After moving through early adopters, 23andMe has struggled to convince new customers to spend this kind of money. As health tech continues to evolve, it will be interesting to see if 23andMe can climb out of the ditch again and get back on its feet.


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