Highlights

  • Sales of direct-to-consumer DNA tests more than doubled in 2017
  • More than 14 million tests were expected to be sold through 2018
  • The direct-to-consumer DNA testing market is expected to grow by a compound annual growth rate, or CAGR, of 16.4 percent through the year 2024
  • By 2024, the DTC DNA testing market is expected to have grown from around $930 million to more than $1.9 billion

Current Statistics Reveal an Industry On the Rise

There’s no question about it: Direct-to-consumer genetic tests, or DTC genetic tests, are here to stay. Some interesting statistics regarding its rise include:

As of today, more than 26 million people have taken at-home genetic tests. Of course, this number reflects the total number of tests that have been purchased – not how many have actually been used. Additionally, some people complete tests from more than one provider, so there is a small amount of overlap.

Even so, if the current rate of growth continues – which it is expected to – the DNA data of more than 100 million people will have been uploaded to one of dozens of online genetic testing sites. The majority of this information will be added to the massive online databases of the four top providers: Ancestry, 23andMe, MyHeritage and FamilyTreeDNA.

Industry Growth By Market Segment

To understand the ongoing growth and popularity of the consumer DNA testing industry, it helps to take a closer look at some of the individual market sectors that are in play. Lumping the industry as a whole into one category – the sale of at-home DNA tests – can be deceiving, and digging into specific segments of the market can help to clarify the hows and whys of the market’s ongoing growth:

Predictive Testing Market Segment – This segment of the genetic testing market deals with the ability to diagnose various diseases far earlier than usual through the identification of genetic mutations to the DNA before they actually occur. Through early diagnosis, diseases could be treated more effectively and affordably, morbidity rates could drop and survival rates could increase. In 2017, this segment of the market enjoyed $111 million in revenue – and massive growth is expected to occur over the next several years as awareness about early detection increases.

Targeted Analysis Technology Segment – The targeted analysis technology segment of the at-home genetic testing market boasts a CAGR of 17.6 percent over the next several years. This segment of the industry deals with the diagnosis of various chronic diseases through the assessment of a person’s genes. Increased adoption of targeted analysis for the testing of cardiomyopathy is expected to increase the rate of growth of this segment even more over the next few years.

Genetic Testing Segment – The genetic testing segment of the market, of course, is also the best known. Sales for this market exceeded $10.6 billion in 2017 alone, and the CAGR from 2018 through 2024 is estimated at 11.6 percent. One of the top factors that is prompting the increased growth of this segment is increased demand for personalized medications that are designed to metabolize more effectively based on a person’s genetic makeup.

Prenatal and Newborn Genetic Testing Segment – Valued at $3.4 billion in 2017, this segment of the consumer DNA testing industry is projected to experience a CAGR of 11.9 percent between 2018 and 2024. This growth is largely attributable to the increasing prevalence of chromosomal abnormalities and genetic disorders in fetuses and newborns. In the future, it may become a matter of course for such testing to be performed on a person before they are even born and to be used going forward for a variety of purposes.

The sudden explosion in the consumer DNA testing market follows a handful of years of fairly significant growth. In 2013, for example, roughly 100,000 such tests were sold – and most of them were sold by Ancestry. In 2014, the number had risen to around 200,000 sold; the following year, roughly 700,000 tests were taken. In 2016, the number that was sold by Ancestry alone shot up to 1.6 million. By 2017, the figure across all companies had leaped up to 12 million tests; 23andMe and a few other companies gained significant footholds in the highly competitive industry.

Top Factors Spurring the Growth of the Consumer DNA Testing Industry

People have been turning to at-home DNA tests for many years now. Such tests have become popular among consumers for many purposes, including strictly for entertainment; for finding distant or long-lost relatives; to discover where their ancestors are from and to determine whether they possess certain genetic traits. The industry has consequently grown by leaps and bounds. That growth has been spurred along by a number of factors, including:

Marketing – In many ways, the ongoing boom in the sale of at-home DNA testing kits can be attributed to aggressive and effective marketing on the part of consumer DNA testing companies. In 2016 alone, for example, Ancestry spent $109 million on TV ads and other forms of advertising for its services, and it was expected to spend far more in 2018. The next biggest player, 23andMe, spent around $23 million on advertising in 2016 too, and they are certain to spend much more in the years to come.

Increased awareness of early disease detection – At-home genetic and DNA testing has also helped to increase awareness about the potential for the early detection of a variety of diseases through gene sequencing. As more people become aware of the potential for identifying and treating diseases through early detection, more of them opt for such testing – and many healthcare providers now promote DNA tests for such purposes too.

The network effect – A handful of companies have risen to the top of the at-home genetic testing industry, and that is largely attributable to what is known as the network effect. This phenomenon revolves around the idea that the more people who join a service, the more useful it becomes for making connections. In the context of genetic and DNA testing, the network effect is quite prominent. Services that have higher numbers of subscribers have a much better ability to connect distant relatives and the like, so they are more likely to attract new customers. This produces a snowball effect that can easily be witnessed right now in the growth of the consumer DNA testing industry.

Increased regulatory support – Although certain at-home DNA testing providers have run afoul of agencies like the FDA, the regulatory environment has generally become more favorable for such services. This, of course, has allowed them to grow and expand more quickly – and this trend is likely to continue into the future, but there are sure to be huge hiccups involving concerns over privacy.

Technological innovations – Thanks to advances and innovations in DNA testing, such tests have become more sensitive, accurate and efficient than ever. A process that once took months to complete can now be finished in a matter of days. As more people participate, the ability of these companies to analyze data and make connections increases too, helping these technological advances to become more effective still.

Prenatal testing – A major uptick in the use of DNA testing during the earliest stages of pregnancy has also contributed to the surge in the popularity of such services. In turn, the industry as a whole has been able to pick up even more business – and much earlier in life than before. In other words, this development has allowed such companies to cast even wider nets when seeking new customers, and that strategy has clearly been working well.

Demand for personalized services – As more people become aware of the option of testing their DNA at home rather than at a doctor’s office, demand for this more personalized level of service has increased significantly. Because this has always been a more personalized service, consumers are increasingly demanding even more personalization, which often comes in the form of the early detection of certain diseases and through genetic analyses that reveal a person’s predisposition for various medical issues.

AI-driven automation – In its earliest years, gene sequencing was an arduous and time-consuming process. Of course, modern technology has rapidly changed that – and artificial intelligence is changing it even more quickly. AI-driven automation, which refers to automated processes that are essentially capable of learning and analyzing to make improvements and the like, is making these tests all the more accessible and affordable for everyday people.

Top Players in the Industry

Although there are dozens of companies offering at-home DNA testing, only a handful – most notably Ancestry, 23andMe, FamilyTreeDNA and MyHeritage – have been cornering the market. There are also dozens of less-than-above-board companies, including many that offer the surreptitious testing of other people’s DNA for the purposes of detecting infidelity and the like. Although the industry is robust, success is not a sure thing. In 2015, the genetic testing giant Illumina partnered with a private equity firm to develop Helix, an “app store” for DNA tests, for $100 million. However, it appears that the app is pretty much a bust.

How At-Home DNA Testing Works

One of the main reasons for the consumer DNA testing industry’s exponential growth is the ease with which people can take and submit their samples for analysis. Most companies ask customers to provide either a saliva sample or a cheek swab. DNA from the cells that are taken is analyzed using a chip that can decode more than 600,000 different areas where people’s DNA code often differs. Known as single-nucleotide polymorphisms, focusing on these areas helps to speed up the process significantly.

These services also analyze DNA to determine the genetic “flavors” of a person’s genes. Put simply, every gene in the human DNA comes in one of approximately 12 variations, or “flavors.” The specific combination of the “flavors” of a person’s genes helps to reveal where their ancestors come from; how closely related they are to others in the database and whether they possess certain traits, including how their earlobes are shaped or whether they are at a higher risk of developing cancer.

Because every region of the world has its own, unique genetic signature, such services can provide fairly accurate information regarding a person’s ancestors. These genetic signatures developed over eons of prehistory when human populations were still distinctly separated. Senator Elizabeth Warren famously used a DNA testing kit to learn that she does, indeed, descend from a Native American.

Effects of the Rise of Consumer DNA Testing

As the consumer DNA testing industry truly comes into its own, it is affecting a variety of changes in a number of surprising ways. From the very start, for example, such services had the potential for creating awkwardness in a person’s life. For instance, someone can find out that they aren’t really biologically related to anyone in their family. That’s just the tip of the iceberg when it comes to at-home DNA testing’s impact on society as a whole; some examples include:

Health Reports – Although they are only currently offered by 23andMe, health reports have emerged to become a huge draw for consumers. In 2018, the company received full clearance from the FDA to test for two breast cancer genes. Not long ago, it was also granted permission to tell consumers about their potential prostate cancer risk. Eventually, such reports might incorporate the study of pharmacogenetics, which can reveal the ways in which a person’s body processes certain types of medication. The FDA has approved tests for detecting 33 variants of multiple genes for this purpose.

Law Enforcement Activity – As genetic databases of voluntarily provided DNA information grow, their usefulness tor law enforcement has made them almost irresistible. Most famously, police in California were able to nab the Golden State Killer, a rapist and murderer who operated decades ago, through the analysis of DNA contributions on GEDMatch – a site that shares test results from multiple DNA-testing firms. Police uploaded the unknown criminal’s DNA to the site and were able to locate relatives, which eventually led to the identification of the serial killer. Ancestry, which requires a search warrant or court order from law enforcement, has stated that they only received 10 “valid” requests of this kind from law enforcement in 2018 – but that figure is certain to rise with the increased availability of such data.

Privacy Concerns – Not surprisingly, the rise of genetic databases and at-home DNA testing by consumers has raised many red flags in the areas of privacy and security. When a person submits their DNA to such services, they are essentially also submitting the DNA of their closest relatives, and this complicates matters even further.

Steps to Protect Consumers’ Privacy – The first step that was firmly taken to protect people’s privacy in the world of DNA testing happened in 2008 with the passage of the Genetic Information Nondiscrimination Act, which prohibits employers and insurers from discriminating based on consumers’ genetic information. In 2018, Ancestry, 23andMe and a handful of other major players joined the non-profit organization The Future of Privacy Forum, which seeks to develop best practices for consumer genetic testing. A few months ago, Ancestry, 23andMe and Helix formed The Coalition for Genetic Data Protection, which will purportedly lobby Congress for privacy regulations within the industry.

HIPAA and European Penalties – Many have argued that the misuse of a person’s genetic information should be considered a violation of the Health Insurance Portability and Accountability Act, or HIPAA, which levies fines of $50 to $50,000 for infractions. European regulators have enacted the

General Data Protection Regulation, which can levy fines of up to $23 million, or 4 percent of a company’s annual revenues – whichever is higher – for infractions. Such regulations could very well come about in North America at some point, but it all depends on the lobbying that occurs in Washington.

Potential Ancestry IPO Bodes Well for Future of Consumer DNA Testing

After going public in 2009 and private again in 2012 through a $1.2-billion buyout, Ancestry is yet again seeking an IPO in the near future. Although the company has not officially confirmed such efforts, it is reportedly preparing for an IPO for the second half of 2019. The company’s direct-to-consumer sales totaled around $15 million in 2010, reached $99 million in 2017 and are expected to surpass $310 million by the year 2022. Capital that is raised through the IPO should help the company to grow and expand even faster – and its nearest competitors are sure to see huge growth too. Therefore, the consumer DNA testing industry is expected to keep growing at a rapid clip well into the future.