As Genetic Testing Blossoms, Companies Search for a Killer App

(Bloomberg) -- Millions of Americans have taken genetic tests to help them learn more about who they are or how sick they could become. In a crowded field of firms selling DNA tests — 10 new products enter the market each day by one estimate — many of the companies are racing to sort out their own identities.

Color Genomics Chief Executive Officer Otham Laraki, a former product manager at Google, likens genetic testing today to the early days of smartphones. When location data came on the scene, he said, everyone thought check-in apps like Foursquare would be a hit. But the killer app turned out to be a completely different use of GPS data: Uber.

“Diagnostics on its own is not going to be the app,’’ said Laraki.

Like some of its competitors, Color Genomics has recently shifted gears. It’s changing its focus from marketing medical tests to patients themselves to selling its service to companies that offer health care to large numbers of people. Invitae Corp., meanwhile, announced last week that it’s taking the opposite tack, offering its testing to patients more directly. Even 23andMe Inc., the industry’s consumer giant, this month announced a change of its own, partnering with a weight-loss coaching app to use DNA data to dole out custom advice.

The changes come against a backdrop of an exploding business. A 2018 study in the journal Health Affairs found that there are already some 75,000 genetic tests on the market. The direct-to-consumer industry has burgeoned from about $15 million in sales in 2010 to more than $99 million in 2017, and is projected to reach $310 million by 2022, according to market-research company Kalorama Information.

Color Genomics imagines the true value of its tech is in offering it to people who aren’t necessarily at risk for disease, incorporating genetic testing into primary care. To that end, it’s been busy inking deals with entities that have access to large patient populations.

“Our big bet is that genetics is just a technology, not a product or a market,” he said.

Last year, Levi Strauss & Co., Instacart Inc., Visa Inc. and Slack Technologies Inc. all signed on with Color Genomics to offer its tests as a benefit to employees. Just last week, the testing firm announced a partnership with NorthShore University HealthSystem in the Chicago area to offer its kits to more than 10,000 patients. No longer will it focus efforts on recruiting individual patients to order tests through its website.

“We’re almost shedding part of the company,” Laraki said.

Another firm is taking the opposite approach. Last week Invitae announced that for the first time it would allow patients to purchase tests from its website, through a doctor or genetic counselor. Previously, its tests were available only from a clinician who would order the test on a patient’s behalf.

Invitae CEO Sean George said the company decided on the new strategy because the wait to see a doctor or genetic counselor was often many months long.

“The whole idea is to eliminate the wait, to reduce barriers to entry,” he said.

At the same time, other novel models have emerged. Nebula Genomics offers consumers the opportunity to sequence their entire genome, and earn digital money by sharing it. LunaDNA offers shares of the company to people who already have DNA data on hand, after scrapping an initial idea to offer cryptocurrency instead.

“There is a shift going on,’’ said Kathryn Phillips, a professor of health economics and health services research at the University of California at San Francisco. Increasingly, she said, hybrid companies like Color and Invitae that straddle the world between consumer and medical are entering the market. But those companies may have to recalculate to win over not just patients but providers and payers as well. And they must convince them all that there’s value in the tests.

“The days of paying $5,000 for a BRCA test that just one company provides,’’ she said, referring to a gene mutation linked to breast cancer, “those days are over.”

To contact the editor responsible for this story: Mark Schoifet at mschoifet@bloomberg.net, Timothy Annett

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