23andMe laying off 14% of employees amid slump in DNA spit kit sales

In the latest sign of a slump in consumer genetic testing, 23andMe is laying off 14% of its workforce amid falling sales of its DNA spit kits. The cut of about 100 jobs, which could be the company’s largest downsize yet, will mostly impact 23andMe’s operations teams, CEO Anne Wojcicki told CNBC on Thursday.

A company spokesperson, Christine Pai, told STAT in an email: “What I can confirm is that we are restructuring the consumer business, which impacts about 14% of employees. Our therapeutics business is not impacted. We’re also narrowing focus on the core businesses — consumer and therapeutics.”

The personal genetics-testing outfit has seen layoffs before: In 2009, three years after 23andMe was founded, the company twice laid off an undisclosed number of staff. In 2016, it laid off six employees.

Sales of consumer DNA tests have fallen industry-wide, not just for 23andMe. Genetic equipment maker Illumina was the first to flag a downturn in sales of consumer tests like the kind 23andMe sells, pointing last summer in an earnings call to what it called a “weakness” in the market.

At the J.P. Morgan Healthcare Conference in San Francisco earlier this month, Illumina said it expected sales of genotyping arrays (most of which are sold to at-home DNA testing companies like 23andMe) to fall roughly 15% in 2020, mirroring similar trends from 2019.

DNA sequencing startup Helix also pivoted recently, potentially because it was witnessing similar declines in interest from consumers or because Illumina recently withdrew as a funder and board member. While the company planned to sell tests directly through what it called an “app store’’ for DNA, it’s now looking to partner with health care providers, Bloomberg reported last May.

The new layoffs offer a hint of a potential, if slight, shift in strategy for 23andMe.

The company made headlines earlier this month after announcing that it had sold the rights to a potential new drug for inflammatory diseases developed from customer data to Spanish drug maker Almirall. The development — a first for the company — marks a potential jumping off point for 23andMe’s larger goal of developing drugs using insights from its customers’ genetic data.

In the coming months, 23andMe will focus on furthering that drug development pipeline, CNBC reported, along with boosting sales of its at-home test kits. At the same time, the company will pull back slightly on its work running clinical trials for drug companies.