Kteily says that by the time the company launched these services, it was too slow. Customers have already left the platform. “I think they hit something viral, which is the concept of where you come from. People found it incredibly fascinating. But once you know this information, you won’t come back five years later and pay for the subscription,” he says.
Sumit Nagpal, a serial health tech entrepreneur and self-proclaimed early adopter of 23andMe, says he was one of the company’s subscribers but eventually stopped logging into the online platform. He says the reports didn’t contain much “useful” health advice. “It never had any life-changing value,” he says.
Nagpal’s newest company, Cherish, which he founded in 2020, develops artificial intelligence-enabled radar sensor platforms for health and safety monitoring. He thinks 23andMe could have had more offerings earlier – such as personalized coaching on diet, exercise and other lifestyle factors on an ongoing basis to keep customers engaged.
In many ways, the 23andMe puzzle is similar to Instant Pot problem. His initial product was so successful that people never had to come back to buy another one.
23andMe has tried to diversify its revenue streams by striking deals that allow drug companies to mine its vast genetic database for potential drugs. In 2015, it established cooperation with Genentech, and after its completion in 2018, it concluded an exclusive agreement with GlaxoSmithKline. The pharmaceutical company invested $300 million in 23andMe, but that deal expired in 2023 and no large partner has stepped into Glaxo’s role. And although 23andMe recently closed its drug development division, it continues to conduct clinical trials on drug candidates it already has.
Now the company has focused on growing its telehealth business. In 2021, it acquired telehealth service Lemonaid. Taking advantage of Ozempic’s madness, Lemonaid began offering Ozempic, Wegovy and the combination semaglutide in August as part of a weight loss program. After an initial consultation with a doctor, membership costs $49 per month, and weight loss medications start at $299 per month for combined semaglutide. “Adding weight loss management capabilities to our customers aligns directly with our strategy to serve the health of approved individuals through preventive measures,” Wojcicki said in August on an earnings call.
But this may not be enough. Estelle Giraud, CEO and founder of Trellis Health, which creates a health app for pregnant women, 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, I care about brand and trust,” he says.
23andMe’s biggest challenge may be building trust after a data breach last year exposed personal information from the profiles of nearly 7 million customers. It doesn’t help that there has always been confusion among users about the company’s data practices. Customers must expressly consent to the sharing of de-identified genetic data for research purposes, but one study conducted in 2017 and 2018 university researchers found that more than 40 percent of customers surveyed were unaware that using and sharing customer data was part of 23andMe’s business model. When users decided to share their data for research purposes, many of them probably didn’t realize that “research” included helping Huge Pharma develop modern drugs.