Personal Genomics: Business Model for 23andMe
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Transcript of Personal Genomics: Business Model for 23andMe
Personal GenomicsRethinking the BusinessModel for 23andMeBy:Adrianus MradiptaChia DingshanFeng HouyuanOng Fu LinPeh TiongSengXu Libing
1. Introduction– Genetics– 23andMe
3. The New Frontier– Introduction– Proposed Business
Model: DTC & B2B
Content
2. Current Business Model & Assessment– Value Proposition, Customer
Selection, Value Capture, Scope of Activities, Strategic Control
– Assessment & Recommendation
What is inside the Genome?
OR
Source: https://www.23andme.com/gen101/genes/
Y chromosome (From Father) and Mito-chondrial (From Mother) are used for identification process.
Cousin
Cell Reproduction make mistakesSNPs (single nucleotide polymorphisms)
SNP also influence disease susceptibility or response to drugs
Source: https://www.23andme.com/gen101/genes/
SNP causes change in physical appearance (e.g. Curly or Straight Hair)
Observable traits are known as:
DNA Sequencing & Technology Improvements
Cost of genome sequencing is dropping
• Sub-$1,000 full genome sequencing is around the corner
• In January 2014, Illuminaannounced a machine that could sequence a full human genome for $1,000
Advancements in Genomics
Advancements in Computing (Big Data)
Ability to Convey Clinical Significance
New Opportunities are Opening Up!
• 23andMe• Based in Mountain View, CA• Founded in 2007 by Anne
Wojcicki, ex-wife of Google co-founder, Sergei Brin
23andMe: How it Works
DNA Sequencing & Analysis23andMe performs SNP Sequencing (vs. full genome mapping)(+) Cheaper, faster(-) Less information
• Health Reports *– Carrier Status– Disease Risk– Drug Response* Health reports currently suspended
23andMe: How it Works
• Ancestry Reports– Ancestry compositions– DNA relatives– 23andMe family tree tool– Maternal & paternal lineage
TIME Magazine Invention of the Year 2008
http://content.time.com/time/specials/packages/article/0,28804,1852747_1854493,00.html
Problems with FDA
• Note that the company is currently having issues with FDA
• Health reports are currently suspended, as of Dec 2013
Validity? Accuracy?
http://www.npr.org/blogs/health/2013/12/06/249231236/23andme-bows-to-fdas-demands-drops-health-claims
Current Business Model
23andMe Consumers
$99
DNA Report
Labs
RI
Govts
Money
Service
Future PlansAs 23andMe grows, business model will shift
Business Model
http://www.forbes.com/sites/matthewherper/2013/06/13/expect-to-see-23andme-ads-as-the-company-tries-to-take-genetic-tests-mainstream/
Current Business Model
CUSTOMER SELECTION
VALUE PROPOSITION
VALUE CAPTURE
SCOPE OF ACTIVITIES
STRATEGIC CONTROL
• Provides a cheap & convenient personal genetics service that produces fast results that will give insights on the customers’ health* & ancestry information
• Cheap: $99, cheaper than competitors• Convenient: kit sent directly to customer’s doorstep• Fast: 2-3 weeks for results to be ready• Insights: disease risks especially
Current Business Model:
Value Proposition
Provides a cheap &convenientpersonal genetics service that produces fastresults that will give insights on the customers’ health* & ancestry information
Current Business Model:
Value Proposition
• Assessment– Huge part of the value proposition
is removed with FDA’s orders– Limitations of Health Reports:
• SNP sequencing: 1 million genes sequenced from a total of 3 billion
• Nature vs. Nurture: 30-70• No follow-up data analysis –
regarding advise & lifestyle changes needed
– Limitations of Ancestry Reports:• Limited by number of people in the
database
http://venturebeat.com/2014/03/12/23andme-ceo-we-need-to-return-to-delivering-health-information/http://www.theguardian.com/technology/2014/mar/09/google-23andme-anne-wojcicki-genetics-healthcare-dna
Current Business Model:
Value Proposition
• Recommendations– Sort things out with FDA & restore
value proposition through health reports
– Link up with physicians/nutritionists/dieticians to add analysis, thus enhancing value proposition
Current Business Model:
Customer Selection
“We’re not really focused on a specific age group or gender or fitness level. It’s the people who have this control mindset”
- Neil Rothstein 23andMe Marketing Chief
• For health reports:Consumers who want to be proactive about their health
Current Business Model:
Customer Selection
• 23andMe recognizes the importance of building lead users!
• Lead Users: Parkinson’s network– Free kit to anyone diagnosed with
Parkinson’s– Largest Parkinson’s genetic research network
with 10,000 people
Current Business Model:
Customer Selection
• For ancestry reports:– Serve a more niche market– Specialized customer groups, such as adopted children
http://ireport.cnn.com/docs/DOC-918630http://www.fourstateshomepage.com/story/dna-helps-reunite-family/d/story/okB1oVl_ukq5It6zsrUWxA
Current Business Model:
Customer Selection
• Assessment– Good use of lead users– Health reports: No focus Too wide customer selection for a start-up.
May stretch resources & difficult to act on• Recommendations
– Focus on specific segments– Eg. People who care about their health and buy vitamins or go to the
gym– Make it for convenient for these people
• Value Chain for genetic reports:
DNA Sequencer Manufacturer
DNA Sequencing
Genetic Data Analysis
DatabaseManagement
Delivery Services
ConsultancyServices
Key to business?
Yes Yes Yes Yes No No
Sources Outsource None
Activity PurchaseIn-housecapability
In-housecapability
In-house capability
Outsource None
Criteria of selection
Out of business scope,
Lower cost,Better technology
Key capability Key capabilityKey
capabilityLowest costs
Potential area to explore
Current Business Model:
Scope of Activities
Assessment•Controlled the key capability areas•Consultancy services is a valuable area to explore
Recommendations•Link up with consultancy services (eg. Physicians, dieticians, nutritionists, gyms)•Partner with clinics, vitamin stores, gyms as additional source of distributions•Will also enhance value propositions & value capture
Current Business Model:
Value Capture
• Currently, 23andMe generates ALL its revenue through sales of the personalized genetics service
• The company has experimented with many models to maximize revenue & generate user base
2007 2008 2009 2010 2011 2012 2013
Product Offerings
Health Reports (started with 14 reports at
launch)
Split into 3 products:Ancestry, Health & complete
report
Recombined the products
244 Health Reports + Ancestry Report
Dec: Healthreports
suspended
Model One-time feeInitial fee
+ subscription modelOne- time fee
Price $999 $399$399 +
$5/month$299 $99 $99
Current Business Model:
Value Capture
• Assessment– Commend reduction of price & removal of subscription to
expand user base– However, still too expensive for the mainstream market– Unable to move to targeted method of value capture: sale of
data to research institutes/universities
• Recommendations– Quickly further reduce price point to expand user base.
Consider: free? expand user base move to B2B sale of genetic data
– More value capture options: commission and referral fee from consultancy services
• Complementary Assets• No hold over complementary assets• Delivery & consultancy services are common, DNA sequencer
manufacturer can sell to anyone• Improve relationship with complementary assets, eg. Long
contracts with manufacturers/delivery services to reduce price.
• Appropriability Regime• Scale & network effects: Larger database will yield better results• Weak patent protection:
• “Polymorphisms Associated with Parkinson’s disease”• Designer baby – no relation to main business
• Need to strengthen IP portfolio, esp. in data analysis through R&D and open innovation
Current Business Model:
Strategic Control
Proposed Business Modelin Healthcare
23andMeConsumers
$99
DNA Report
Labs
RI
Govts
Money
Service
DNA
Physicians
Referral fees &
commissionReferral
Nutritionists Dieticians
Recommendations
CUSTOMER SELECTION
VALUE PROPOSITION
VALUE CAPTURE
SCOPE OF ACTIVITIES
STRATEGIC CONTROL
Genetic Services in Sports
The New Frontier
Yao Ming and His Family
A “Natural” Selection
• Yao's grandfather, one of Shanghai's tallest men, was discovered too late for basketball but his son, the 6ft 7in (2.01 m) Yao Zhiyuan, soon found himself dragged into the sports system.
• There he was paired off with the 6ft 3in (1.90 m) Fang Fengdi, China's women's captain (more than half a foot taller than the average man in Shanghai)
• The two were encouraged to marry in a system with undertones of eugenics, the controversial gene-pool manipulation espoused by the Nazis and previously trumpeted by Beijing.
• Yao's birth had been anticipated for decades by communist officials -desperate to boost national pride through sports - who had been tracking his family for two generations.
No accident … Yao Ming towers over Jason Smith.
Photo: AP
http://www.smh.com.au/news/basketball/yao-ming-the-basketball-giant-made-in-china-by-order-of-the-state/2006/01/18/1137553645228.html
Yao Ming and Shaq
“Sports” Genes
• In 2003, a seven-scientist team tested some 400 elite athletes for the ACTN3 gene.
• Everyone has two copies of that gene, each of which comes in one of two variants, R or X.
• The R variant instructs the body to produce alpha-actinin-3, a protein found only in fast-twitch muscle fibres, the kind that contract rapidly and violently to facilitate explosive movement
• Genotyping an individual as a XX genotype is positively associated with endurance performance.
• Not a single one of the 32 Olympic sprinters in the study had two X variants.
http://www.google.com/patents/EP1546403B1Actn3 genotype screen for athletic performance
http://www.ncbi.nlm.nih.gov/pmc/articles/PMC1180686/
ACTN3R X
Figure was taken from Yang et al., 2003.
Transcended mere chatter
• In the wake of the '03 study, the Manly Warringah Sea Eagles of Australia's National Rugby League began testing players so that workouts could be tailored for those apparently more disposed to explosive powerlifting and sprinting
Beyond ACTN3
• The Duke football team sought institutional permission to submit players' DNA to a university researcher who will look for genes that predispose players to particular injuries.
http://www.sportscotland.org.uk/media/701955/the-speed-gene.pdf
http://www.ncbi.nlm.nih.gov/pubmed/23681449
Sports GeneticScreening (1)
“Injuries” Genes
http://www.academia.edu/3139286/Athletic_performance_and_risk_of_injury-Can_genes_explain_all
• Athletes are at increased risk of acute and chronic musculoskeletal tissue injuries as a result of training and/or competition.
• Many are polygenic traits, with each individual gene having a small effect on the phenotype, but added together having a significant contribution.
• Predisposition to muscle, tendon, ligament, and/or other injuries can negatively impact an athlete’s ability to train optimally and perform during competition
• Ultimately ending their competitive careers or preventing them from reaching their full potential.
Uzbekistan Is Using Genetic Testing to Find Future OlympiansThe country is experimenting with "sports selection at the molecular genetic level."
Ron Synovitz and ZamiraEshanova
Feb 6 2014, 12:59 PM ET
• Rustam Muhamedov, director of the genetics laboratory at Uzbekistan's Institute of Bioorganic Chemistry, announced the program for "sports selection at the molecular genetic level" on January 5 in the government-owned Pravda Vostoka newspaper
• Muhamedov says that after the 50 genes of a child are tested from a blood sample, "their parents will be told what sports they are best suited for"— such as distance running or weightlifting.
• Muhamedov's announcement marks the first time any country's Olympic Committee has been officially linked to a program using genetic tests to recommend specific sports programs for children.
Sports GeneticScreening (2)
http://www.theatlantic.com/international/archive/2014/02/uzbekistan-is-using-genetic-testing-to-find-future-olympians/283001/
Uzbek weightlifter Ruslan Makarov at the London 2012 Olympic Games.(Reuters/Dominic Ebenbichler)
Nature vs. Nurture (1)A Conversation with David Epstein, author of “The Sports Gene”Published on September 3, 2013 by Jonathan Wai, Ph.D. in Finding the Next Einstein
• A mantra of football coaches is that “You can’t train speed.”
• A study today that followed Oklahoma State football players over four years of strength training in college football
• Improved their strength immensely in the weight room, but they didn’t improve in running speed at all.
• Ideally you want an Achilles tendon that is both long and stiff, and stiffness you actually can change to a degree through training. But the length is purely a function of the distance between your calf and your heel bone, and that’s something you’re born with and you can’t change.
“You Can’t Train Speed”—Slow Kids Never Make Fast Adults
Nike
http://www.businessinsider.com/16-revelations-about-sports-and-genetics-2013-8?IR=T&op=1
Nature vs. Nurture (2)A Conversation with David Epstein, author of “The Sports Gene”Published on September 3, 2013 by Jonathan Wai, Ph.D. in Finding the Next Einstein
• Eye sight is more important than reaction time when it comes to hitting a fastball
• Our brains recognize the ball as it leaves the pitcher's hand and predicts where the ball will go based on visual information. Eye sight is the most important genetic aspect of hitting, and 58% of MLB players have superior depth perception
• Albert Pujols is only in the 66th percentile of reaction time compared to college students
http://www.businessinsider.com/16-revelations-about-sports-and-genetics-2013-8?IR=T&op=1
Albert PujolsGetty Images/Jason Miller
Nature vs. Nurture (3)A Conversation with David Epstein, author of “The Sports Gene”Published on September 3, 2013 by Jonathan Wai, Ph.D. in Finding the Next Einstein
• Only two players in the NBA in 2010-11 didn't have unusually large wingspans.
• Humans typically have a height to wingspan ratio of 1 : 1
• It's 1 : 1.063 among NBA players
http://www.businessinsider.com/16-revelations-about-sports-and-genetics-2013-8?IR=T&op=1
Stephen Dunn/Getty Images
A Conversation with David Epstein, author of “The Sports Gene”Published on September 3, 2013 by Jonathan Wai, Ph.D. in Finding the Next Einstein
• Your ability to get better with practice is genetic
• Scientists have found that practice isn't created equally for everyone.
• Different people can do the same exercises for the same amount of time and their improvement over time will be totally different. For instance some people's aerobic capacity won't get better even with deliberate training.
• That's part of the reason why it will take some people 3,000 hours of practice to achieve mastery, and others 10,000.
http://www.businessinsider.com/16-revelations-about-sports-and-genetics-2013-8?IR=T&op=1
Michael Steele/Getty Images
Donald Thomas won the high jump world championships after 8 months of training
Nature vs. Nurture (4)
Unexploited Market
SPORTSGENETICS(DATA)
SCOUTING
23andMe
Private TrainersNutritionistsPrivate Health
PractitionersHealth and
Wellness Clinics
Government Laboratory
MoneyService
( Data )
Research and Development
Pharmaceutical
Companies
Reputation
Hospitals
BasketballFootball Baseball
Professional Sports Leagues & Training Academies Businesses
Money
Reports and updates to
individual accounts
DNA Kit
Existing
Consumer
New Consumer
Referrals
Genetic Screening
Service
Saliva
Subscription Credits
per Referral
ExperienceIntellectual
Property
Protection
Subscription
( Annually )
Health Products
and
Consultancy
Services
Money
(Data Privacy Rights)
Sports Traits Data
Questionnaires
Exposure
(Referrals)
Commission
Patents
Money
Patents Filing / Infringements
Money
Exposure
from
Sponsorship
Sponsorship
(Merchandise)Data
(Referral of sport talents)
Genetic Screening
Education Courses
SPORTSGENETICS(DATA)
SCOUTING
SPORTS
Customer SelectionDirect to Consumers(DTC)
23andMe
Reports and updates to
individual accounts
DNA Kit
Existing
Consumer
New Consumer
Referrals
Saliva
Subscription Credits
per Referral
Experience
Subscription
( Annually )
Money
(Data Privacy Rights)
Sports Traits Data
Questionnaires
Direct-To-Consumers
• Young individuals with interest to predict and discover their athletic strengths / sports niche
• Sports career options to attempt and pursue• Prospects of turning into Elite Professionals
o Weekend athletes and sports enthusiasts devoted to tailor workouts / diets to their body types
o Keep in shape
Value Propositions(DTC)• Easy to use DNA Test Kits at the comfort of own
home
• Competitive/affordable pricing for personal genome test with State-of-the-art technology
• Global Exposure to wide range of Professional Sports Leagues as compared to specific ones
• Subscription fee credits for new customer referrals
• Fast and reliable serviceso All tests done in CLIA-Certified Laboratory
• Accurate and detailed data analysis (interpretation)
o through the company’s network of qualified practitioners and nutritionists
23andMe
Reports and updates to
individual accounts
DNA Kit
Existing
Consumer
New Consumer
Referrals
Saliva
Subscription Credits
per Referral
Experience
Subscription
( Annually )
Money
(Data Privacy Rights)
Sports Traits Data
Questionnaires
Value Capture(DTC)
• Sales of the personalized genetics service
o DNA Test Kits o DNA Reports with specific sport traits analysis
• “Sports Scouting Service” (S3) Subscription Fee
o Option to include oneself into Company’s “Sports Scouting Database”
o Consumers opted in will be tagged as “Talents”
o Database accessed by Businesses
23andMe
Reports and updates to
individual accounts
DNA Kit
Existing
Consumer
New Consumer
Referrals
Saliva
Subscription Credits
per Referral
Experience
Subscription
( Annually )
Money
(Data Privacy Rights)
Sports Traits Data
Questionnaires
Customer SelectionBusiness to Business(B2B)
Business to Business
Sports Market Segment – “Talent Data”• National Olympic Committees• Professional Sport Leagues• Talent Identification Companies • Training Academies
R&D Market Segment – “Health Report Data”• Universities / Colleges• Hospitals • Government / Commercial
Healthcare Market Segment– “Health Report Data”• Nutritionists• Dieticians• Physicians / Physiotherapists
Value Propositions(B2B)
• Ease of data usage and Interpretation
o Customised report for the different market segments
o In-house education and training
• Highly reliable data o Sports talent recruitment o Laboratories R&Do Healthcare services
• Competitive/affordable pricingo Increase rate of diffusion o Build-up installed base
Value Capture(B2B)
• Subscription fee
Sports Market Segmento Access to the “Sports Scouting Service” o Access to the talents’ videos, audition,
records etc.
R&D Market Segmento Access to anonymous health database
• Commissions
Sports Market Segmento Certain percentage of transfer fees for
successful drafts into Pro-Team/National Teams
Healthcare Market Segmento Certain percentage of sales collected
from successful consultancy referrals
Scope of ActivitiesDTC & B2B
DNA Sequencer Manufacturer
DTC Personal Genomics Services
Sports trait Genome Patent
DatabaseManagement
ExclusiveSales Team
ConsultancyServices
Key to business?
Yes Yes Yes Yess
Yes No
Sources Hybrid Outsource
Activity Purchase In-housecapability
1. In-housecapability (primary)
2. Purchase (secondary)
In-housecapabilityHouse -housecapability
In-housecapability
Partnership
Criteria of selection
Out of business scope,
Lower cost,Better
technology
Key capability Key technologyKey capability
assetExclusiveresources
Out of business
scope
Strategic Control
o Invest in making brand stronger and build brand equity
o Uphold reputation through Deliver high standard of
services and products
Deliver company’s promises to customers
Ensure customers privacy/ confidentiality
CompanyBrand
Strategic Control
Complementary assets
o Secure long-term commitment
DNA kit manufacturers (printing, containers)
Distribution channels (FedEx, DHL, delivery companies)
Strategic Control
o Outsource to contractors
o Achieve low cost through economy of scale
Bulk manufacturing of DNA kits
Bulk distribution of DNA kits
AccessoriesProducts
Strategic Control
o Enhance Public Awareness
Conferences/Seminars/Talks
TVs shows/ Radios/ Newspapers/Magazines
Training and courses
o Specialized in-house trained sales forces to direct promote
ServicesMarketing
Strategic Control
o Patent key technologies developed though their R&D
o Build up and patent genes which correspond to sports traits
IP Protection
• DNA Sequencing technology is advancingo Cost reducing but throughput increased
• Increasing interest in sequencingo More research groups using the technologieso Companies working on future technologies
• Next Generation Sequencing (NGS)o Data will be more easily to be interpreted
• A Big Business Opportunities for 23andMeo To leverage on the two pillars “healthcare” and “sports” business to drive growtho “healthcare” as the foundation, “sport” industry as the high payoff business.
Conclusion:Future on DNA SequencingOpens to New Business Models