Genetic information is being used for everything from predicting health risks to personalizing exercise and dietary regimes. China represents a huge potential market for direct-to-consumer (DTC) genetic testing

In 2017, more than 15 million US consumers had their DNA analyzed through direct-to-consumer (DTC) genetic testing. The number was about 300,000 in China, a market penetration rate of only 0.03%.

Over 200 genetic testing startups have sprung up in China the past few years, including 23mofang, WeGene and Somur. And VC firms are chomping at the bit to get in on the action. In 2016, 95% of Chinese genomic startups received more than RMB 10 million in financing each.

However, in order to exploit fully the potential of the market, these startups have some significant obstacles to surmount.

For the majority of Chinese consumers, DTC genetic testing is still a technological novelty. Since the results are not accepted by hospitals for use in diagnosis and treatment, many consumers just get tested for fun. “[Many of] our customers are interested in their ethnic roots,” said 23mofang founder and CEO Zhou Kun.

The high cost of genetic testing in China had previously represented a huge barrier to adoption. Since startups began building their own test centers in mid-2017, the cost of DTC genetic tests has decreased significantly.

US$30 to trace your DNA

Beijing-based Somur, with a user base of 150,000, lowered the price of its cheapest genetic test kit from RMB 399 to 199. The former price tag of US$60 was a bit steep for most customers, but many are willing to spend less than US$30 to learn where their ancestors came from or how well their bodies tolerate alcohol.

Somur’s RMB 199 kit claims to test over 200 genetic variants. Results tell customers about health risks such as their chances of developing diabetes and genetic traits such as sucrose tolerance.

The low cost strategy has worked well so far. After 23mofang slashed the price of its test kit to RMB 299 in June 2018, the startup’s monthly sales revenue increased four times within half a year.

But these tests are all one-off purchases. Customers only need to take one genetic test to find out ancestry composition. These startups are now struggling with the question of how to create sustainable business models.

To gain repeat customers, some companies have developed additional products related to genetic testing.

Somur, for example, has devised a “life coach” package. After paying RMB 499, customers take a genetic test that can generate a report containing 286 disease and risk indicators. Somur’s experts then analyze purchasers’ DNA further to provide personalized diet and lifestyle recommendations on a regular basis via the company app.

Privacy concerns

Even though the protection of genetic testing results has proven to be a difficult task for firms worldwide, China has no laws or regulations protecting genetic information from being misused or against genetic discrimination, both of which remain a concern for Chinese test takers.

In early June 2018, Israeli DNA testing service MyHeritage revealed that hackers had breached the usernames and passwords of its 92 million accounts.

In the wake of the revelation, The Verge speculated, “This data could be sold on the down-low or monetized to insurance companies. [...] One day, I might apply for a long-term loan and get rejected because deep in the corporate system, there is data that I am very likely to get Alzheimer’s and die before I would repay the loan.”

Indeed, employers may eventually use genetic testing results as a reason to dismiss employees. According to The Wall Street Journal, even though the US has passed the Genetic Information Nondiscrimination Act, which bars companies from asking employees about family medical history or genetic testing, some American companies still attempt to collect genetic information illegally.

Chinese DTC genetic testing startups have taken a stand by expressing respect for privacy and detailing the measures they are taking to protect user data.

"WeGene will delete all the personal data generated from our genetic test services as per user request. Our researchers are allowed to use data only after receiving user consent," said founder Chen Gang.

According to Somur founder and CEO Wang Xiaokang, his company has built a multilayered user protection mechanism, which includes separating users' genetic data from personal details and encrypting test reports.

Regulation and standards needed

In the US, DTC genetic tests have to be approved by the FDA before going on the market. In China, there is no regulatory body that assesses, for example, the accuracy and reliability of commercial genetic testing.

In exchange for 2ml of saliva and RMB 499, users of Beijing-based startup GeseDNA’s test kit are sent a report of more than 200,000 words. The lengthy report supposedly details everything a user’s genes reveal about their personality, relationships, life expectancy, etc.

But many customers have trouble taking these results seriously. “The test report says I have the obesity gene, but I’ve actually been laughed at by others for being too skinny since childhood,” complained a young man who took a DTC genetic test in 2017.

According to Zhou Kun, there are no industry standards for DTC genetic testing in China. Companies use different testing procedures and databases, and, as a result, the same sample can yield multiple results. Additionally, how companies interpret the results can diverge as well.

The industry intends to establish a uniform set of technical standards, and 23mofang is eager to be part of the process. “We are preparing to help set standards by expanding our database,” said Zhou. The company currently has data from over 160,000 users, the most among Chinese DTC genetic testing startups.

With proper regulation and industry standards, DTC genetic testing in China may be able to play a bigger role in guiding customers’ health management. For now, however, these startups will have to be content with just telling users whether they are more prone to being bitten by mosquitoes than others.

Edited by Wendy Lovinger


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