By Kathie Wrick
May 26, 2009 | Insights Outlook | Welcome to the world of consumer genomics, where there are different rules for building successful businesses than in medical diagnostics. A host of companies are marketing or selling genetic tests directly to consumers. As expected, some companies are far more evidence-based than others in their test and product offerings.
Personal genomics companies first launched in November 2007, including 23andMe, deCODEme, and Navigenics, and have brought the latest in gene chip technologies to the marketplace. Knome will sequence your entire genome for $99,500. But genetic testing has been marketed to consumers in various ways for a long time. Most of the earlier firms built on past capabilities in doing forensic genetics and, as Internet retailing started to grow, began offering paternity and family relationship tests online to consumers.
The science and business have evolved rapidly in the past decade. Certainly, medical genetics will not completely evolve to a consumer business. But thanks to the confluence of two transformational technologies—the Internet, and the delineation and measurement of the human genome—procurement of some genetic tests has migrated from the scientist- or health professional-controlled domains to the world of cyberspace.
Entrepreneurs have many motivations for selling genetic tests directly to consumers. They have watched consumer disenchantment with the U.S. health care system and its institutions grow exponentially for two decades, and consumers are now more proactive than ever in making their own health care decisions. Some firms believe that genomic medicine is coming anyway, and consumers armed with their genetic information can help drive it even faster. Others feel that everyone should be aware of their own genetic information, regardless of what the medical profession thinks. The ability to make expensive purchases securely online became the bridge that made consumer genetics happen, as prices for these tests or services range from hundreds to many thousands of dollars. Though medical genetic testing will grow in its own right, and much of this work and associated business revenues will stay within the traditional clinical laboratory testing services market, the Internet has allowed a mini “distribution revolution” for genetic tests.
The Biggest Variable
There is a big consideration for the technologically savvy genetic testing companies who have elected to sell their services directly to consumers—the consumers themselves. The 2007 startups have the best scientists and latest technologies. Yet it is not clear that personal genomics companies have applied the same level of rigor and resources to understanding their consumer marketplace as they have to the technology developments which helped make genetic testing for consumers affordable. Had these startups solicited funds from investors specializing in consumer products businesses, they might have been told to come back when they had appropriately sized their market and could back up an estimate of sales revenues based on sound consumer research. Consumer goods and services are different businesses altogether than medical diagnostics, pharmaceuticals, or health care. The compelling genetic technology advances applied to direct-to-consumer testing services would likely take a back seat to well-done consumer research that reveals how many consumers of a certain psychographic profile show a strong intent to purchase.
It’s not clear that the current investors in personal genomics companies, who know technology businesses very well, are asking the right questions about what is important in a consumer products and services business. Even the publicly available surveys on consumer attitudes about genetics and genetic testing suggest strongly that consumers may not be the best targets for marketing and selling these tests. That’s not to say there won’t be a good number of consumers who will buy them. Rather, it just might mean that the vast majority of consumers, whose numbers are needed to sustain and grow a business long term, may not be likely to buy.
The secret could lie in identifying the consumer segment that is highly motivated to buy, learn what drives them, and design product offerings according to exactly what they are looking for—better than the competitors. The genetic test may not ultimately be the end product, but the vehicle for businesses to help consumers plan their lives after learning the results. Even then, without good consumer research, no one knows what the right product is or how big (or small) that product’s business might be.
Kathie Wrick can be reached at kwrick@comcast.net.
Further Reading:
Direct-To-Consumer Genetic Testing: Business Prospects in the United States, by Kathie Wrick, PhD, covers the business of genetic tests marketed and sold directly to consumers. Published by Insight Pharma Reports, March 2009.
This article also appeared in the May-June 2009 issue of Bio-IT World Magazine.
Subscriptions are free for qualifying individuals. Apply today.