23andMe Is Sinking Fast. Can the Company Survive?

Kteily says that by the time the company launched these services, it was too late. Customers had already left the platform. “I think they hit on something about the virus, which was the idea of ​​where it comes from. People find that very interesting. But once you know that information, you will not come back after five years to pay the fee,” he said.

Sumit Nagpal, a successful entrepreneur in the health technology space and self-described adopter of 23andMe, says he was among the company’s subscribers but eventually stopped accessing the site. He says these reports did not provide much “practical” health advice. “It’s never had a life-changing benefit,” he says.

Nagpal’s latest company, Cherish, which he founded in 2020, builds radar-based sensor platforms infused with AI for health and safety monitoring. He thinks 23andMe could have had more offerings up front—for example, personal coaching on diet, exercise, and other aspects of lifestyle to keep customers engaged.

In many ways, the 23andMe conundrum is similar to the Instant Pot problem. Its first product was so successful that people didn’t need to come back to buy another one.

23andMe has tried to diversify its revenue streams, striking deals to allow pharmaceutical companies to mine its vast genetic database for drug leads. It partnered with Genentech back in 2015, and when that ended, it got an exclusive deal with GlaxoSmithKline in 2018. The pharma company invested $300 million in 23andMe, but that deal expires in 2023, with no major partners stepping in to fill Glaxo’s shoes. And while 23andMe recently shuttered its drug discovery unit, it continues to advance the drug users it already has into clinical trials.

Now, the company has turned to growing its telehealth business. In 2021, it acquired the telehealth service Lemonaid. Capitalizing on the Ozempic craze, Lemonaid began offering a combination of Ozempic, Wegovy, and semaglutide in August for a weight-loss program. After an initial consultation with a doctor, membership is $49 per month for weight loss medications starting at $299 per month for combined semaglutide. “The addition of weight loss management to our customers is directly in line with our strategy to bring services to the health of the approved population through preventive measures,” Wojcicki said on the August earnings call.

But it may not be enough. Estelle Giraud, CEO and founder of Trellis Health, which develops a pregnancy health system, says the space to fight obesity is already crowded. 23andMe will have to prove that it offers something different compared to other telehealth providers. “If I’m a customer looking for a telehealth solution, it comes down to product and trust,” he said.

And establishing trust may be a major challenge for 23andMe after last year’s data breach exposed personal information from nearly 7 million customer profiles. It doesn’t help that there is always confusion among users about a company’s data practices. Customers must give their express consent to share their de-identified genetic data for research purposes, but one survey conducted in 2017 and 2018 by university researchers found that more than 40 percent of customers interviewed did not know that using and sharing customer data was part of 23andMe’s business. model. When users chose to share their data for research, many of them probably didn’t realize that “research” included helping Big Pharma develop new drugs.