NEW YORK (GenomeWeb) – Financial services firm UBS has estimated that the global opportunity in the consumer genomics space may be anywhere between $2 billion and $7 billion per year, a purposely broad range that factors in a nascent market and evolving utility.
A UBS survey of 1,000 people representative of the US population revealed that 80 percent were aware of consumer genomics tests, but only 5 percent said they had been tested on their own initiative, without a doctor's recommendation. Moreover, when asked if they were interested in being tested in the next 12 months, half said they were likely interested or undecided, while the other half said it was unlikely they'd get tested.
Analyst Jonathan Groberg and members of UBS' Evidence Lab research team began tracking the consumer genomics space following Illumina's decision last year to launch Helix, an applications-based consumer genomics service. After facing regulatory hiccups, 23andMe also received clearance from the FDA in 2015 to begin offering carrier testing directly to consumers, and currently boasts around 1.2 million customers for its service, which also provides ancestry and traits information. Similarly, the online genealogy company Ancestry.com, which provides a consumer genomics service that allows customers to discover more about their ethnicity and distant relatives, has genotyped approximately 1.5 million customer samples.
Analysts like Groberg are watching the consumer genomics market because it is at the center of a number of interesting trends, including the growth of high deductible consumer-driven health plans, increasing use of big data analytics, and use of social media. "Most investors have looked at this market with quite a degree of skepticism," he said, acknowledging that consumer genomics is a "tricky topic and it's very, very early days."
"When we're talking about a market that is so nascent … and so unknown, one of the biggest takeaways is … that basically, forecasters are always wrong," Groberg said.
During a presentation of UBS' research last week, he highlighted how based on the best information available back in 1980, McKinsey & Company analysts were off by a factor of more than 100 in their projections of mobile phone subscribers in the next two decades. In 1980, McKinsey's researchers must have considered a number of factors, including the size of the phone, its cost, the limited fashion in which affluent consumers were using them, and predicted there would be approximately 900,000 subscribers by the year 2000. It turned out there were 110 million users.
Genomics “is a very new concept to consumers,” Groberg said. "There are all kinds of reasons today to say it's not going to be very big, but the whole point of markets is that these technologies, these applications, these business models, and people themselves, evolve." When market observers talk about the consumer genomics space, they highlight barriers such as high cost and lack of utility of genomics information in healthcare.
Recognizing this, UBS' valuation is intentionally broad. For the bull case scenario, where consumer genomics becomes a $7 billion market, UBS analysts assume there are 80 million users worldwide, each paying $60 per year (or $5 a month) on a subscription basis. For the bear case, where the market is around $2 billion, analysts assume a price per sample of $49 and that the US market is penetrated 1 percent and the ex-US market .5 percent.
Going by the number of samples analyzed by the two top firms in this space, 23andMe and Ancestry.com, approximately .04 percent of the global population has taken a consumer genomics test, Groberg estimated. However, market research from UBS' Evidence Lab showed that four out of five surveyed US residents said they knew about consumer genomics testing and around 13 percent claimed they had taken such a test.
"This is more than what the actual numbers are," Manas Misra, director of the Evidence Lab, said during a call to discuss his team's research. "It's also important to [note] that consumers, right now, understand consumer genomics in their own way."
Researchers interviewed 1,000 people online who were representative of the US adult population in terms of age, gender, income, ethnicity, and geographic locale, in an effort to gauge their views about consumer genomics, which they defined as a test that "provides general genetic information and analysis of your DNA and genome."
A survey is not a test of truth. A survey is a test of perception of truth.
Misra explained that in conducting the survey, he did not want to define "consumer genomics" too narrowly. "A survey is not a test of truth," he said. "A survey is a test of perception of truth."
Because the field is so new, if someone stopped a random person on the street and asked them what they thought of consumer genomics, there would be a wide range of responses. "From a research point of view, that's a great opportunity where a lot of people are aware of it," Misra said, adding that marketers can convert that interest "into the accurate level of details we want them to understand."
People who said they had testing through a consumer genomics firm or are likely to get tested in the near future tended to be younger, between 25 and 39 years old, employed full time, and on the higher end of the income bracket. Caucasians and Asians were more likely to say they had been tested.
Only a third of survey participants who said they had been tested indicated they got it on their own, while the rest said a doctor prescribed it. This could be reflective of people's broader perceptions about consumer genomics, even though industry observers generally believe such tests are not ordered by doctors. Also, as a result of the FDA cracking down on direct-to-consumer marketing of health-related genomic information, most consumer genomics firms now require some form of interaction with a genetic counselor or an ordering physician.
Among those who said they had been tested, most indicated they wanted to learn about their genetic makeup without a doctor, create a better health plan, or figure out their ability to respond to drugs. Comparing those who claimed to have been tested through 23andMe or Ancestry.com, more people indicated they'd received testing from 23andMe in order to learn their personal risks for diseases. However, more people said they were tested through Ancestry.com to learn about health risks for their children, even though the firm doesn't perform health-related genetic testing.
The biggest barrier … is this idea of utility, figuring out what the killer app is so everybody wants to get this information.
"It's still early days," Misra said. "And that's why we see a mixed bag here in terms of motivations." He noted that because consumers may not know everything about a company and its offerings, they are "filling in the gaps with their imagination."
In terms of brand awareness, 52 percent knew Ancestry.com and 19 percent knew 23andMe, while a smaller subset mentioned firms that wouldn't even consider themselves in the consumer genomics space, such as the pharmacogenomics company Genelex (13 percent) and genetic testing firm Invitae (8 percent). Around 31 percent of subjects couldn't name any consumer genomics company. "Claimed awareness is high, but as we get into the details of what that awareness means and who offers consumer genomics, there is a wide variation," Misra said.
Among respondents who knew about consumer genomics but hadn't been tested yet, approximately 50 percent said they were likely to get tested or undecided about taking a test in the next year. These people indicated they wanted to know more about their ancestry, were curious about genetics, or learn about a possible genetic cause for their family health history. The top health risks they wanted to learn about through testing included heart disease, Alzheimer's disease, diabetes, and high cholesterol.
However, 50 percent said they were very or somewhat unlikely to get tested in the next 12 months, which "tells us there are certain barriers out in the market that need to be addressed," Misra observed. Some of the reasons for why respondents were not interested in consumer genomics included high cost of testing, particularly when it was mentioned alongside other risks and problems, such as lack of accurate disease risk predictions, as well as privacy and data misuse.
The UBS survey showed that 85 percent of people indicated that consumer genomics testing was very or somewhat affordable at $99. Currently, Ancestry.com's genotyping service has a $99 price tag, while 23andMe charges $199.
In the future, the industry dynamics will lead to a “natural monopoly,” Groberg predicted. 23andMe and Ancestry.com have the most samples tested currently, but Illumina could also be a big player as a provider of sequencing tools and with its launch of Helix. Ultimately, the market winner, according to Groberg, will be the company that creates the best consumer experience, has an innovative business model, and takes advantage of "network effects," facilitated by social media and online tools that consumers use to connect with one another and that companies use to grow their business.
"Personally, I think the biggest barrier … is this idea of utility, figuring out what the killer app is so everybody wants to get this information," he said.