Your question on what the mission of this company is — is it to make money, to benefit society, or both? — is a really good one, and to be honest, I’m not sure yet. I wonder if even they are still trying to figure it out. I can say, though, that I feel strongly that they can’t ignore the responsibility to society to employ this incredible wealth of data for the benefit of patients. So far, I think that they have shown commitment to share their database with researchers, so I am happy with how they have been balancing these (possibly conflicting) objectives to date.
The idea of targeting physicians to recommend these testing kits is fascinating. My understanding is that they haven’t targeted MDs to date, and now I’m imagining a 23andMe sales force that visits doctors and encourages them to get their patients enrolled. I wish I could ask them if they’ve considered this — it’s a really interesting idea. Maybe this is even a place where they could leverage their big pharma partnerships who have existing detailing forces and might add this product to their reps’ bags.
I would also like to see them devise and communicate a clear value proposition to insurers to get the testing kit included on the reimbursement formulary. $199 is a lot of money for a lot of patients, and the more people they are able to add to their database, the more insights they will be able to uncover.
Thank you for such a thoughtful reply, Sonali! In my response to Arkesh’s comment, I shared some of my thoughts on why I’m quite optimistic about their in-house discovery efforts. I agree with you both that this is a new world for them, and one that is quite removed from their core capabilities to date. However, they’ve been able to leverage partnerships so effectively in the past that I am hopeful that they will be able to navigate this next stage effectively with the expert input of others. I am also hopeful that they continue along the partnership path that is more central to their business model to date (selling data to pharmaceutical firms, as you mentioned), because as I touched on in my response to Arkesh, my greatest worry is that they start limiting the access to their database to outside researchers.
In terms of key capabilities for drug discovery, a lot of what 23andMe will do is sift through mountains of data for abnormalities that appear consistently across a given disease. Unfortunately, at least in my experience consulting for large pharmaceutical companies, bio-statistics and bioinformatics departments are usually under-resourced and less than cutting edge. Because of this, I actually think that 23andMe (and their hybrid tech background — one of the earliest investors was Google) is actually better positioned than a lot of big pharma to employ their own data in the identification of promising therapeutic targets.
One thing that’s interesting is that the company recently raised the price of their testing kits to consumers from $99 to $199. This is confusing to me, as if I were setting strategy at the company, I would be pushing to enroll as many people into the service as possible (and focusing on monetizing the data vs. the kits themselves). It seems that they’re still pushing forward on multiple paths to profitability, so perhaps they’re not putting all their eggs in the drug discovery basket quite yet :).
It’s funny — I’m also nervous about their foray into in-house discovery, but for completely different reasons. Or I guess partially the same ones, but from a slightly different perspective. I’m also concerned about how allowing partners access to their data will dilute their competitive advantage, but because it might encourage them to no longer participate in research collaborations. What’s so special about this company to me is that the *do* share their data (at a price, of course) with public and private partners, so everyone’s research efforts are being advanced. If 23andMe starts hoarding their data, it’s the patients who lose.
Regarding their drug discovery capabilities, I’m actually quite bullish based on the talent they’ve been able to hire in (spurred by the aforementioned partnerships). Their CSO is Richard Scheller of Genentech fame, and the company is surrounded by such buzz that I imagine they’re able to draw in some of the smartest scientists around (I’m sure all the researchers are itching to get unlimited access to such amazing data themselves). Once the science leaves the bench and enters the clinic I imagine they’re going to be more out of their element, so I would be surprised if they didn’t license out/partner their early assets with big pharma who can guide the drugs through the development process. Agreed, though, I’m really looking forward to seeing where they are able to take things!
It was interesting that my first reaction to your post was somewhat defensive — I really appreciate you challenging how positively I view this company and making me think more deeply about some of the moral implications of a private company controlling such a valuable resource.
I think you’re right that there is a real risk of consumers becoming frustrated if another entity starts profiting off their genetics (something 23andMe has avoided to date). In particular, I imagine if their first product is an expensive drug for an orphan indication that there would be some considerable public backlash that could jeopardize their model.
I’m not convinced that the company needs to compensate consumers for their data in dollars, just convince them that they’re being “paid” through their donation to potential lifesaving treatments. I think it’s a gift to share your genetic data in the hope of helping others, and if I were at 23andMe, I would make sure that that was the message that was consistently communicated (in particular when the company starts making money). For example, by donating a large portion of profits back into research or into patient care in the disease areas in which they are developing treatments.
Maybe this will leave them open to a competitive threat if another firm enters with the promise of paying consumers for their genomic data (which I also have moral qualms about), but the naive part of me hopes it wont. Given their reputation and the data they’ve accumulated to date, I believe 23andMe has the ability to defend their leading position for the foreseeable future.
That’s a really great point. Coming from a healthcare focus, I tend to underestimate the value that the individual consumer gets from using the service. Thanks for reminding me!
Really interesting post! I’ve been exposed to J&J mainly through their pharmaceutical arm, and their strategy of growing largely through M&A is one I’ve definitely picked up on. I’d be interested to know how the productivity (as measured by new innovation/product introduction) of their target firms changes once they have been rolled up into such a large corporation, and if the decentralized management strategy is able to keep the level of innovation high.
I found this post really interesting. I was thinking through how slowly medical/dental professionals are to adapt to change (hence Invsalign’s decision to focus on current prescriber sales growth vs. recruiting new orthodontists to the product), and wonder if there is a chance to target students in dental school. Sales reps in biopharma do this with physicians in their residency programs, and that way the docs start out familiar with the product vs. needing to change their prescribing habits once their practice is established.
I am unfamiliar with how IP protection/patents work in this space, but assuming the patent expires 20 years after filing (as it does with pharmaceuticals), I wonder what the competitive reaction will be once other firms are allowed to enter. Does Invisalign have a major advantage as the first mover here, or are insurance companies and/or orthodontists more sensitive to price? Will Invisalign be able to maintain the manufacturing advantage it has developed, or will new entrants be able to replicate this strategy?
As a Gilt customer and someone who loves finding a great bargain, I found this post really interesting. I didn’t realize that Gilt started out as an invitation-only model, and agree that the site has managed to maintain a “luxury” feel through careful curating of its offerings.
I am curious how many customers are repeat purchasers over time, and how the average amount of time spent on the site has changed as the company matures. I worry a bit about people getting desensitized to the flash sale model (similar to how customers have left Groupon in droves), but am excited to see where the founders take Gilt in the future.