With a deepening US recession and consumers cautiously spending on luxury items, the burgeoning personal genomics industry may need to change its marketing message from focusing on "fun" to emphasizing "savings."
"In the coming months, there might be a transition in terms of marketing where it is directed not so much as a tupperware-turned-genomic-profiles, where you're hosting these little parties, and making it the catchy thing to do," Jonathan Witonsky, an analyst in Frost & Sullivan's Healthcare group specializing in drug discovery technology and clinical diagnostics, told Pharmacogenomics Reporter last week.
Among the consumer genomics firms, Google-backed 23andMe has taken the most glitzy and eye-popping marketing approach, dressing up its web service with attractive graphics and throwing "spit parties" with celebrities in New York City. More conservative competitors Navigenics and Decode Genetics' DecodeMe have tried to distance themselves from 23andMe's portrayal of genetic testing as "fun."
Navigenics recently partnered with a physicians group to market its testing service [PGx Reporter 12-08-2008]. Decode has tried to paint its competitors as marketing firms and present itself as being more focused on developing novel genetic tests and discovering genetic risk associations.
Instead of focusing on the lighter aspects of genetic testing, consumer genomics firms "might position it more in terms of the potential cost savings that you might realize with these types of tests," Witonsky said. Although consumers may not see these healthcare savings in the short term, "what we're seeing is that the general consumer is understanding the idea of predictive medicine and preventative medicine as not only having an impact on their own health but in terms of finances, that certain future healthcare costs might be averted."
According to the Pew Research Center, as a result of the economic downturn, 60 percent of Americans say they are changing the way they save and invest money as of December, a nearly 30 percent increase from October. Nearly three-fourths of people with annual family incomes of more than $75,000 — essentially those with the most expendable income — have said they are cutting back on spending as a result of the economic crisis.
Based on the rapid growth in most areas of US healthcare spending in recent years, some industry observers had projected that the healthcare industry would be recession-proof. In reality, however, it hasn't exactly played out that way.
Over the past year, several large pharmaceutical companies, including Merck, Schering-Plough, and Wyeth, have slashed jobs amid fewer blockbuster drugs, increasing generic competition, patent expirations, and lower spending as a result of the economy.
Meanwhile, one of the largest players in the diagnostics industry, Laboratory Corporation of America, lowered revenue growth in 2009 from between 3.5 percent and 5.5 percent to between 2 percent and 4 percent.
"Given the ongoing deterioration in the economy, it seems prudent to forecast lower growth for 2009," said LabCorp CEO David King in a statement. "Our revised guidance reflects the expected impact on earnings from economic factors that worsened during the fourth quarter."
How the economic crisis has impacted the emerging consumer genomics companies is hard to gauge since many of the firms are not public. However, if consumers are cutting back spending across the board, then paying 23andMe almost $400 to learn if eating asparagus will affect the smell of their urine may be on the chopping block along with other non-essential healthcare spending, such as BOTOX and LASIK eye surgery.
After several companies recently reported declines in breast implant and laser eye surgeries, industry observers projected that the recession may have a negative impact segments of healthcare sector perceived as medically non-essential, such as the cosmetic surgery industry.
