17 23andMe – Insights into Direct to Consumer Genetic Testing

23andMe – Insights into Direct to Consumer Genetic Testing

By: Louis Gasparini

It was a usual sunny day in California when Anne Wojcicki heard about companies that were sequencing human genomes at an affordable price for consumers. This sparked an idea in her, to deal with a problem she had been observing for years. It was 2006, society was in the age of the internet and information, online movements such as YouTube enabled anyone to broadcast video. Internet giants like Google, Microsoft, and Apple were opening new possibilities with computing, and rendering information increasingly accessible at an ever growing scale. However, the problem Wojcicki saw was that the healthcare industry was not hopping onto these technological revolutions, if only there was some way to change that.

The idea of improving the healthcare industry, and moving it into the age of the internet is what spurred the founding of 23andMe in 2006 by Anne Wojcicki, Linda Avey, and Paul Cusenza (Seife, 2013). Over the past 12 years through aggressive strategies and significant capital investments, 23andMe has grown to a company now valued at over $1 billion. The name 23andMe refers to the 23 pairs of chromosomes that make up a person’s genome (the sum of all their genes). 23andMe offers what is called Direct to Consumer Genetic Testing (DTCGT), a process where an individual sends in a sample of their DNA and 23andMe performs DNA sequencing and reports back on the results. 23andMe’s personal genetic testing service has garnered notoriety around the world, it was awarded the title of “Invention of the Year” in 2008 by TIME magazine and the company has gained attention for establishing efforts in researching several genetic diseases (23andMe Inc., 2008). There is a myriad of information to be gleaned from an individual genome. Genome sequencing reveals everything about someone, from their sense of smell, to where in the world their distant ancestors came from. In recent years genetic tests that report health related traits have been put on the market. 23andMe markets health tests that report on predispositions to certain diseases and carrier status of recessive disease genes, which can be inherited by a person’s children. 23andMe built a business on marketing this information to consumers, however they stirred up significant consumer controversy while doing so.

Context: Direct to Consumer Genetic Testing

The DTCGT industry is growing rapidly and is expected to be a market worth over $340 million USD by 2022 (Philips, 2016). It is a rapidly growing market full of many companies looking to claim market share (Philips, 2016). These companies operate outside of the traditional health care industry in which genetic testing is used as a clinical tool (Agurs-Collins et al., 2015). DTCGT enabled anyone to access health related genetic information without a prescription from a medical professional. DTCGT flourished over the past decade due to several factors: improvements in the cost of DNA sequencing technology, increasing awareness of genetic science in the population, and movements in the medical industry toward personalized medicine. 23andMe capitalized on these opportunities and constructed a simple yet effective business model.

The declining cost of DNA Sequencing

Substantial improvements in DNA sequencing technology is what made conducting DTCGT possible. The first complete human genome was sequenced in 2003 by the National Human Genome Research Institute (NHGRI). This first whole genome sequence took 12 years and over $3 billion USD to complete (NHGRI, 2010). However DNA sequencing technology improved significantly to the point where a human genome could be sequenced in a matter of days for about $1000 USD (NHGRI, 2016). Additionally there was no longer a need to sequence entire genomes to learn important things about a person’s DNA. Genetic and medical research determined the exact locations of important regions in the human genome, allowing scientists to pinpoint small regions for testing (Farr, 2018). By sequencing many small regions, as opposed to an entire genome, the cost of determining a set of specific traits dropped to less than $50 USD (NHGRI, 2016). Indeed, these improvements made 23andMe’s entire business model possible by attracting consumers through offering genetic testing services at a cut rate price.

Consumer Trend: Increasing Awareness of the Importance of Genetics

Modern North American consumers have become increasingly aware of the importance of genetics over the last decade. According to the data from the 2013 U.S. Health Information National Trends Survey, over 35% of participants were aware of DTCGT, up 8.5% from 3 years previous (Agurs-Collins et al. 2015). Additional independent surveys showed that 81% of participants knew that “their genetics influence their risk for developing certain diseases” and that over 74% were “interested in exploring their DNA” (23ndMe Inc., 2017). These various survey results were backed up by market trends, that showed increased demands for DTCGT, especially for ancestry services. Additionally over 70% of respondents indicated that they would prefer to know what genetic health risks they possessed even for diseases without a cure (23ndMe Inc., 2017).

Personalized Medicine – An Emerging Field

Personalized medicine is a field in which medical practices and decisions are based on an individual’s particular risks for disease or predicted response to treatments (McMullan, 2014). The aim of personalized medicine is to prevent disease and also to treat it properly if it develops (Chen, 2015). Treating patients based on their unique medical history and genetics is a procedure being adopted over traditional methods. These traditional methods involve treating anyone with the same condition the same way, without looking at specific factors that may be unique to an individual (McMullan, 2014). The power of personalized medicine is increasing as more targeted therapies to diseases are developed. Genetics plays a major role in personalized medicine, especially for genetic diseases and cancer (McMullan, 2014). For example, someone who carries genes that increase their risk of developing breast cancer will be prescribed an annual mammogram to monitor for tumors. Consumers armed with knowledge of their genetics obtained from DTCGT would be able to make better informed decisions about their healthcare by speaking with medical professionals about the results.

23andMe: Business Model

DTCGT became a frictionless process that can be completed by any consumer with ease. In the case of 23andMe consumers need only order a saliva collection kit online, which is mailed to them, they then provide a non-invasive saliva sample, and send it back to 23andMe for sequencing. An online report is then sent to consumers with the results when DNA testing is complete. These results can be viewed and shared without any training. DTCGT results are obtained without the need for a prescription from a doctor. 23andMe offers 2 genetic testing services:

  1. Ancestry Service: Informs on what geographic regions of the world a person’s DNA came from, as well as trivial traits like eye colour and finger lengths (for full report details see Exhibit 1).
  2. Health + Ancestry Service: Includes everything from the ancestry service as well as reports on health related traits, genetic disease risk factors, and carrier status of disease traits (for full report details see Exhibit 1).

23andMe developed a simple yet effective business model to generate revenue from these 2 products. Initial revenue comes from the purchase of the test kits, but this is far from their most lucrative source. The price of the test kits dropped significantly over a few years, from $299 to $99 for the ancestry service (Farr, 2018). The real power of 23andMe’s business model came from the data generated from customers DNA. For every DNA sample they receive from a consumer, 23andMe added and stored a new genetic profile in their database, which passed 5 million records in 2017 (Farr, 2018). This massive amount of data was 23andMe’s most valuable resource. Using this data, 23andMe established 2 major branches of the company, Research Services, and Therapeutics (R&P Research, n.d).

The research services department of 23andMe focused on collaborating with other research companies such as biotechnology and pharmaceutical firms for the purposes of identifying new genetic associations with diseases (R&P Research, n.d). Essentially 23andMe would sell access to their vast genetic database if a company paid the right price. Pfizer and Genentech are two companies that have paid for access to 23andMe’s database for their own research purposes (Chen, 2015). Storing and selling user’s data prompted public privacy concerns. However consumers agreed to these terms when signing up for the service. Additionally, 23andMe ensured that the genetic data is anonymous when accessed in this way, with no personal information linked to the records. As time went on, controversy over user privacy did not abate.

23andMe also established a therapeutics division which in their own words “is committed to discovering and developing novel therapies that can offer significant benefits for patients” – 23andMe Inc. (23andMe Inc. 2018b).

23andMe aimed to use their genetic database as a starting point to identify potential drug target candidates for treating several types of disease, from cancer therapies to respiratory disorders (23andMe Inc., 2018b). These therapies would work in symphony with personalized medicine. The financial value of creating new drugs or therapies is that they may have constituted a blockbuster patent, and lead to substantially increased revenue for the company.

This model of using consumer’s genetic data prompted controversy over privacy concerns and led many medical professionals to question the ethics with which 23andMe operated.

Navigating the Controversy

Concerns over Direct to Consumer Health Testing

DTCGT was a young industry and the regulations pertaining to different aspects such as kits, health testing, and the storage and usage of genetic data were lagging (Niemiec & Howard 2016). Medical professionals throughout the healthcare community voiced their concerns over several aspects related to health testing for consumers as well as the genetic data generated from personal genetic services. Significant controversy arose with the inclusion of health reports in DTCGT services. 23andMe introduced their health testing service after a messy regulatory run-in with the United States Food and Drug Administration (FDA) (Seife, 2013).

In early 2013 the FDA notified 23andMe that its test kits were classified as “medical devices” which the agency is responsible for regulating, and as such 23andMe was responsible for passing federal approval if it was to market them (Woods 2013). 23andMe started working with the FDA on obtaining regulatory approval of their kits, but for unknown reasons the company cut communications with the FDA for 6 months and failed to meet their regulatory deadlines (Seife, 2013). In another unconventional move, 23andMe started marketing their health service soon after, without obtaining any approval for this additional service (Seife, 2013). This resulted in the FDA banning the sale of 23andMe’s kits on November 22, 2013. An excerpt from the warning letter states:

“your company has failed to address the issues described during previous interactions with the Agency or provide the additional information … Therefore, 23andMe must immediately discontinue marketing the [personal genome service] until such time as it receives FDA marketing authorization for the device.”

  • James L. Woods (Woods 2013).

23andMe did not comply however and continued selling their kits for ancestry services, but did discontinue their health related testing on December 5, 2013. The company then started working with the FDA on gaining approval for their products. CEO Anne Wojcicki said in a press release:

““Our goal is to work cooperatively with the FDA to provide that opportunity in a way that clearly demonstrates the benefit to people and the validity of the science that underlies the test.”

  • Anne Wojicki (23andMe Inc, 2013).

23andMe was granted full approval of its ancestry service and partial approval of its health services in early 2015, with which they could market DTCGT for carrier status of genes for certain diseases including Blooms Syndrome (23andMe Inc., 2015). Since receiving this partial approval in 2015 23andMe has expanded their health services to encompass 8 diseases including Parkinson’s disease and late onset Alzheimer’s (23andMe Inc. 2018a). The service also included reports on carrier status of over 40 recessive conditions including cystic fibrosis (see Exhibit 1). Most recently 23andMe was granted approval for the first ever direct to consumer cancer risk test, where they offered testing of 2 mutations that may bring increased risk of developing breast cancer (Stallings, 2018).

However as 23andMe’s efforts to expand their health testing continued so did the controversy around the usefulness of the data and the ethics involved in the process. Doctors and genetic experts questioned the validity of the data generated as most genetic diseases are not cause by the presence of a gene alone but are multifactorial (Stallings, 2018). The chances of developing a certain condition can depend on a person’s lifestyle and environment in addition to their genetics (Niemiec & Howard, 2016). Medical professionals therefore question just how relevant and applicable the data is to a person’s health. Concerns were also raised over the ethics behind telling someone they may develop a disease with no cure (Masunaga, 2017). This process may spur fits of undue anxiety over complex processes that non-experts don’t fully understand (Masunaga, 2017). Surveys showed that most DTCGT customers don’t fully understand that health reports are based on likelihood statistics (Stallings 2018). Experts worried that results would be misinterpreted and that this placed undue stress on people and their families.

Concerns over Consumer Privacy and Data Usage

Major controversy was raised over DTCGT companies taking advantage of consumers through harvesting genetic data from unknowing people and using it for their own purposes (Seife, 2013). Public concerns pertaining to user data privacy proved to cause major public relations crises for companies such as Facebook, which was the subject of a major scandal after news of its data collection practices broke, resulting in a severe multibillion dollar devaluation (Smythe, 2018). 23andMe has been the subject of much scrutiny for the way it handles and monetizes user data. Awareness initiatives were promoted by consumer rights activists to inform consumers exactly what they are handing over when giving 23andMe access to their DNA (Seife, 2013). For every sample of consumer DNA 23andMe created a permanent genetic record, which under the right circumstances may be given to parties which a person did not want to have access (Madan, 2017). 23andMe as well as other DTCGT companies are required to hand over an individual’s genetic records if a warrant is issued by law enforcement (Madan, 2017). Additional concerns over genetic discrimination by health insurance companies were brought up (Madan, 2017). These concerns spurred the formation of laws such as the Genetic Non-Discrimination Act in Canada put in place by the Canadian Human Rights Commission (CHRC) (CHRC, 2017). This set of laws prevents insurance agencies and any other institution from discriminating against Canadians based on their genetics. However threats of uncontrolled data leaks and hacking remained, which could cause dissemination of users data to any number of third parties, a risk consumers might not be aware of.

23andMe aimed to alleviate these concerns, outlining in their privacy policy that they would not share personal data with any third party without the consent of an individual. Vocal critics cited the afore-mentioned abilities of law enforcement that contradict this claim though. 23andMe’s efforts did little to quell the onslaught of controversy as 23andMe itself was cited saying that its scientific research “does not constitute research on human subjects” and is therefore not bound by regulations relating to consumers privacy and welfare (Seife 2013). This is a grey area that would cause accusations of bad business against 23andMe.

Future Considerations

While constantly under the microscope of regulatory and public scrutiny 23andMe maintain their objectives of giving people access to their genetics, and furthering personalized medicine through medical and therapeutic research (23andMe Inc., 2018c). They have not yet met a regulatory hurdle they could not overcome, or a controversy they could not wade through, however there were questions facing 23andMe about how they would navigate future obstacles. 23andMe expanded into international markets in the UK, Canada, and Australia. If its past troubles in the United States were any indication, they would face further controversy in these new markets.

“We believe it’s important for consumers to have direct and affordable access to this potentially life-saving information. We will continue pioneering a path for greater access to health information, and promoting a more consumer-driven, preventative approach to health care.”

  •  Anne Wojcicki (23andMe Inc., 2018c).

23andMe had several considerations to make going forward. What is the best way to market their health service so as not to cause controversy or create potential public relations setbacks? How will they deal with potential scenarios, such as handing personal information to law enforcement? What is the best way to use consumer’s genetic data, without stirring up concerns over privacy? Will their current business model be their downfall if they continue in the same direction they are headed now? These considerations were of increasing importance as 23andMe expanded into international markets.



1.    23andMe Inc. (2008). TIME Magazine Names 23andMe’s Personal Genome Service 2008 Invention of the Year. Retrieved from: mediacenter.23andme.com/press-releases/time-magazine-names-23andmes-personal-genome-service-2008-invention-of-the-year/

2.    23andMe Inc. (2013). 23ANDME, INC. PROVIDES UPDATE ON FDA REGULATORY REVIEW. Retrieved from: https://mediacenter.23andme.com/press-releases/23andme-inc-provides-update-on-fda-regulatory-review/

3.    23andMe Inc. (2015). 23andMe Granted Authorization by FDA to Market First Direct-to-Consumer Genetic Test Under Regulatory Pathway for Novel Devices Retireved from:  https://mediacenter.23andme.com/press-releases/fdabloomupdate/

4.    23andMe Inc. (2017). 23andMe Asks About DNA. Retrieved from: https://blog.23andme.com/news/23andme-asks-dna/

5.    23andMe Inc. (2018a). Health and Ancestry Service. Retrieved from: https://www.23andme.com/dna-health-ancestry/

6.    23andMe Inc. (2018b). Therapeutics Careers. Retrieved from: https://mediacenter.23andme.com/therapeutics/careers/

7.    23andMe Inc. (2018c). 23andMe Granted First FDA Authorization for Direct-to-Consumer Genetic Test on Cancer Risk. Retrieved from: mediacenter.23andme.com/press-releases/23andme-granted-first-fda-authorization-direct-consumer-genetic-test-cancer-risk/

8.    Agurs-Collins, T., Ferrer, R., Ottenbacher, A., Waters, E. A., O’Connell, M. E., & Hamilton, J. G. (2015). Public awareness of direct-to-consumer genetic tests: findings from the 2013 US Health Information National Trends Survey. Journal of Cancer Education, 30(4), 799-807.

9.    Canadian Human Rights Commission. (2017). “New genetic non-discrimination law will promote privacy and human rights in Canada.” Retrieved from: https://www.priv.gc.ca/en/opc-news/news-and-announcements/2017/nr-c_170505/

10. Chen, C. (2015). 23andMe Turns Spit Into Dollars in Deal With Pfizer. Retrieved from: https://www.bloomberg.com/news/articles/2015-01-12/23andme-gives-pfizer-dna-data-as-startup-seeks-growth

11. Farr, C. (2018). 23andMe is getting more specific with its DNA ancestry tests, adding 120 new regions. Retrieved from: https://www.cnbc.com/2018/02/28/23andme-adds-120-new-regions-to-its-ancestry-test.html

12. Madan, M. (2017). “That DNA you send in can help trace your ancestry. Police, too, may be interested.” Retrieved from: http://www.miamiherald.com/news/nation-world/national/article185198178.html

13. Masunaga, S. (2017). “What the new, FDA-approved 23andMe genetic health risk reports can, and can’t, tell you.” Retrieved from: http://www.latimes.com/business/la-fi-23andme-reports-20170414-htmlstory.html

14. McMullan, D. (2014). What Is Personalized Medicine?. Retrieved from:  http://genomemag.com/what-is-personalized-medicine/

15. National Human Genome Research Institute. (2010). The Human Genome Project Completion: Frequently Asked Questions. Retrieved from: www.genome.gov/11006943/human-genome-project-completion-frequently-asked-questions/

16. National Human Genome Research Institute. (2016). The Cost of Sequencing a Human Genome. Retrieved from: https://www.genome.gov/sequencingcost

17. Niemiec, E., & Howard, H. C. (2016). Ethical issues in consumer genome sequencing: Use of consumers’ samples and data. Applied and Translational Genomics, 8, 23–30.

18. Phillips, A. M. (2016). “Only a click away – DTC genetics for ancestry, health, love, and more: A view of the business and regulatory landscape.” Applied and Translational Genomics, 8, 16–22. http://doi.org/10.1016/j.atg.2016.01.001

19. R&P Research. (n.d). How 23andMe Makes Money? Understanding 23andMe Business Model. Retrieved from: https://revenuesandprofits.com/how-23andme-makes-money-understanding-23andme-business-model/

20. Seife, C. (2013). “23andMe Is Terrifying, but Not for the Reasons the FDA Thinks.” Retrieved from: www.scientificamerican.com/article/23andme-is-terrifying-but-not-for-the-reasons-the-fda-thinks/

21. Smythe, C. (2018). “Facebook Privacy Scandal Unleashes Nationwide ‘Litigation Swarm’.” Retrieved from: https://www.bloomberg.com/news/articles/2018-04-04/facebook-privacy-scandal-unleashes-nationwide-litigation-swarm

22. Stallings, E. (2018). “Allowing 23andMe To Test For BRCA May Do More Harm Than Good.” Retrieved from: https://www.huffingtonpost.com/entry/opinion-stallings-23andme-brca_us_5ab90fe4e4b008c9e5f9b8cd

23. Woods, J. L. (2013). “WARNING LETTER Document Number: GEN1300666.” Retrieved from: https://www.fda.gov/ICECI/EnforcementActions/WarningLetters/2013/ucm376296.html


Exhibit 1: Elements of 23andMe Ancestry and Health Reports

Source: 23andMe Inc. (2018). List of Reports Included in Each Service. Retrieved from: https://www.23andme.com/dna-reports-list/

Ancestry Service Report:

  • Ancestry Composition
  • Maternal & Paternal Haplogroups
  • Neanderthal Ancestry
  • Your DNA Family
  • Opt-in DNA Relative Finder Service

Health + Ancestry Service

Includes all services available in Ancestry Service plus:

Genetic Health Risk reports

  • Age-Related Macular Degeneration
  • Alpha-1 Antitrypsin Deficiency
  • Celiac Disease
  • Hereditary Hemochromatosis (HFE‑Related)
  • Hereditary Thrombophilia
  • Late-Onset Alzheimer’s Disease
  • Parkinson’s Disease

Wellness reports

  • Alcohol Flush Reaction
  • Caffeine Consumption
  • Deep Sleep
  • Genetic Weight
  • Lactose Intolerance
  • Muscle Composition
  • Saturated Fat and Weight
  • Sleep Movement

Traits reports

  • Asparagus Odor Detection
  • Back Hair (available for men only)
  • Bald Spot (available for men only)
  • Bitter Taste
  • Cheek Dimples
  • Cleft Chin
  • Earlobe Type
  • Earwax Type
  • Eye Color
  • Finger Length Ratio
  • Freckles
  • Hair Texture
  • Light or Dark Hair
  • Early Hair Loss (available for men only)
  • Newborn Hair
  • Photic Sneeze Reflex
  • Red Hair
  • Skin Pigmentation
  • Sweet vs. Salty
  • Toe Length Ratio
  • Unibrow
  • Widow’s Peak

Carrier Status Reports

  • Agenesis of the Corpus Callosum with Peripheral Neuropathy
  • Autosomal Recessive Polycystic Kidney Disease
  • Beta Thalassemia and Related Hemoglobinopathies
  • Bloom Syndrome
  • Canavan Disease
  • Congenital Disorder of Glycosylation Type 1a (PMM2-CDG)
  • Cystic Fibrosis
  • D-Bifunctional Protein Deficiency
  • Dihydrolipoamide Dehydrogenase Deficiency
  • Familial Dysautonomia
  • Familial Hyperinsulinism (ABCC8-Related)
  • Fanconi Anemia Group C
  • GRACILE Syndrome
  • Gaucher Disease Type 1
  • Glycogen Storage Disease Type Ia
  • Glycogen Storage Disease Type Ib
  • Hereditary Fructose Intolerance
  • Herlitz Junctional Epidermolysis Bullosa (LAMB3-Related)
  • Leigh Syndrome, French Canadian Type
  • Limb-Girdle Muscular Dystrophy Type 2D
  • Limb-Girdle Muscular Dystrophy Type 2E
  • Limb-Girdle Muscular Dystrophy Type 2I
  • MCAD Deficiency
  • Maple Syrup Urine Disease Type 1B
  • Mucolipidosis Type IV
  • Neuronal Ceroid Lipofuscinosis (CLN5-Related)
  • Neuronal Ceroid Lipofuscinosis (PPT1-Related)


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