• 23andMe is laying off over 100 of its employees
  • The popularity of its genetic testing kit is waning for still to be understood reasons
  • Some Wall Street analysts say this is the end of the DNA testing fad
  • 23andMe pioneered the home DNA testing business in 2007

23andMe, the personal genomics and biotechnology company that pioneered home DNA testing for ancestry in 2007, will lay off some 100 employees amid a sudden and baffling sales downturn in its main ancestry and health tests market.

The decision to shed staff was announced by CEO Anne Wojcicki, the ex-wife of Google Inc. co-founder Sergey Brin. The staff to be laid-off account for some 14 percent of the company's workforce. Wojcicki said the layoffs include the operations teams in charge of the company’s growth and scaling efforts and other teams, as well. To reinvigorate sales, 23andMe plans to focus more on the direct-to-consumer (DTC) business and its therapeutics arm. It will downplay its clinical studies arm.

Wojcicki told CNBC the company has to downsize because it’s “what the market is ready for.” She said this process "has been slow and painful for us."

Wojcicki was “surprised” to see the market starting to turn sour so suddenly. She can't pinpoint any exact reason but believes the public's concern about privacy might be a factor. This means fears about a person's DNA winding-up in the wrong hands. There's also the perception DNA data exposes information about family members to others because it’s totally unique.

What Wojcicki might be hoping for is a return to the heady days from 2015 to 2018 when the company experienced a welcome period of hyper growth after it patched-up its dented relationship with the U.S. Food and Drug Administration (FDA). Health-related results for U.S. customers who purchased genetic test were suspended from late November 2013 until late 2015 while undergoing an FDA regulatory review.

A period of rapid growth followed that saw the company boost its staff count to 700 people. Sales of DNA tests were growing at a rapid pace but then unexpectedly cooled down in 2019.

The first clear sign the ancestry and health tests market was in trouble came last summer when Illumina, maker of DNA sequencing machines used by 23andMe, said in its earnings call the entire segment was down. Illumina CEO Francis deSouza didn't explain why, but said Illumina was taking a “cautious view” of the market for ancestry and health tests.

Some Wall Street analysts said the sudden downturn might herald the end of the DNA testing fad pioneered by 23andMe.

23andMe began offering DTC genetic testing in November 2007. Customers provide a saliva testing sample the company partially single nucleotide polymorphism (SNP) genotyped. Results were posted online. Time magazine named the company genetic testing kit "Invention of the Year" for 2007.

A DNA testing kit; part of the research was compiled by volunteers who had signed up through commercial DNA testing company 23andMe A DNA testing kit; part of the research was compiled by volunteers who had signed up through commercial DNA testing company 23andMe Photo: AFP / Eric BARADAT