Kteily says that by the time the company rolled out these services, it was too late. Customers had already left the platform. “I think they've discovered something viral, which is the concept of where you come from. People found that so fascinating. But once you know that information, you won't come back to pay for a subscription five years later,” he says.
Sumit Nagpal, a serial healthcare technology entrepreneur and a self-described early adopter of 23andMe, says he was among the company's subscribers but eventually stopped logging into the online platform. He says the reports didn't provide much “actionable” health advice. “It never had any life-changing value,” he says.
Nagpal's latest company, Cherish, which he founded in 2020, develops radar-based sensor platforms equipped with AI for health and safety monitoring. He thinks 23andMe could have had more offerings sooner, such as personalized coaching on nutrition, exercise and other lifestyle factors on an ongoing basis to keep customers engaged.
In many ways, the 23andMe conundrum is similar to the Instant Pot problem. The original product was so successful that people never had to come back to buy a new product.
23andMe has sought to diversify its revenue streams by striking deals that allow pharmaceutical companies to mine its vast genetic database in search of drugs. It had a partnership with Genentech way back in 2015, and when that ended, it struck an exclusive deal with GlaxoSmithKline in 2018. The pharmaceutical company invested $300 million in 23andMe, but that deal expired in 2023, with no major partners stepping in to fill Glaxo's shoes. And while 23andMe recently shuttered its drug discovery arm, it continues to develop the drug candidates it already has in clinical trials.
Now the company has focused on expanding its telehealth business. In 2021, it acquired telehealth service Lemonaid. Capitalizing on the Ozempic craze, Lemonaid began offering Ozempic, Wegovy and compounded semaglutide in a weight-loss program in August. After an initial consultation with a doctor, membership is $49 per month, with weight loss medications starting at $299 per month for compounded semaglutide. “The addition of weight loss management for our customers fits directly within our strategy of delivering services to the health of approved individuals through preventative actions,” Wojcicki said in an August earnings call.
But it may not be enough. Estelle Giraud, CEO and founder of Trellis Health, which is building a health app for pregnancy, says the anti-obesity space is already crowded. 23andMe will have to prove that it offers something unique compared to other telehealth providers. “If I'm a customer looking for a telehealth solution, it comes down to brand and trust,” she says.
And building trust could be 23andMe's biggest challenge after last year's data breach exposed personal information from nearly 7 million customer profiles. It doesn't help that there has always been confusion among users about the company's data practices. Customers must give their explicit consent to share their anonymized genetic data for research purposes, but a study conducted in 2017 and 2018 by university researchers found that more than 40 percent of customers surveyed were unaware that using and sharing customer data was part of 23andMe's activities. model. When users chose to share their data for research, many of them probably didn't realize that “research” also meant helping Big Pharma develop new drugs.
