Would You Pay 999 Yuan for a Genetic Report About Yourself? | 100 Entrepreneurs

The technical barrier to genetic testing has come down. The barriers of risk and consumer education have not — which makes this hard to call a good business.

Genetic testing is now within anyone's reach.

A few hundred yuan buys you a testing kit online, and the process is not complicated: collect your saliva, mail it back to the company, wait a while, and you get a report analyzing your genes.

In the Chinese market, as many as 130 companies now sell this kind of consumer-facing genetic testing. The startup WeGene is one of them.

For 999 yuan, WeGene ships you a box by SF Express, postage included: a saliva collection tube, an instruction sheet and a return bag. The instructions say not to eat for 30 minutes beforehand, then spit 2-4 ml into the tube and mail it back. Four to six weeks later, you can download your analysis report from WeGene's website.

The first thing the report shows is an overview of your ancestry figures, one of the features that sets WeGene apart from other companies.

Then come five categories — athletic genes, nutrition and metabolism, health risks, hereditary disease and drug guidance — covering more than 200 indicators.

Every one of these results points to the limits of a service like WeGene's: 600,000 test loci cannot cover all the loci a given item needs to involve; the results cannot be used for clinical diagnosis; and they will keep changing as genetic research advances.

WeGene wants to sell tests in order to collect genetic data on Asians

Over the past two years, WeGene has sold nearly 10,000 of these kits and reports. Founder Chen Gang told QDaily that the company now takes about 1,000 to 2,000 orders a month, and that in nearly two years of operation it has accumulated 14,000 genome datasets. In December 2016 it updated its website with a community feature, letting users start groups around topics that interest them.

To deliver the service, WeGene commissioned custom chips from the biotech chip company Affymetrix to read 600,000 mutation loci, then sent the saliva tubes it collected to a technology company in Shanghai, which ran the chip tests on its Illumina instruments.

Zhang Yuning, a PhD in biophysics and nanoscience at McGill University in Canada, said: "Custom chips save a lot of money. The main difference from whole-genome sequencing is that a chip tests only the loci you specify, while sequencing reads all 3 billion loci in the human genome — but not every locus carries information relevant to the analysis, and it costs 10 times as much."

Selling the tests alone earns the company almost nothing. According to Chen Gang, the saliva tubes WeGene uses come from the Canadian company Genotok and cost more than 200 yuan each; add the outsourced testing technology and the labor of analyzing each report, and the gross margin on a single customer is now very thin.

What WeGene cares about is the commercial value locked in this East Asian genome data. But how to realize that value, and how much data it takes before the data is useful — WeGene has no answer to either.

In the United States, WeGene has a successful model to copy: 23andMe, which began selling saliva-based genetic tests to the whole world 10 years ago. Both companies use chip-based testing, and both read 600,000 loci.

The difference is that 23andMe was founded in 2006, sells mainly into the US and European markets, and over more than a decade has accumulated 1.2 million genome datasets — becoming the genetic testing industry's first unicorn valued above US$1 billion.

With more than a million datasets in hand, 23andMe's main line of sales today is selling genetic data in bulk to drug and biotech companies, which use it to guide drug development.

In January 2015, 23andMe signed a US$60 million agreement with Genentech, a Roche subsidiary, to jointly analyze genome sequencing data from 3,000 Parkinson's patients and find new ways to treat the neurodegenerative disease.

Working with drug companies is one of the business models WeGene imagines for its own future, but that requires enough user genetic data, and privacy problems come with it. Chen Gang believes users should decide for themselves whether to open their genetic information to third parties — though users who do not hand their data over will not get a range of later services, such as the results of continuing research.

"It's a bit like Google collecting information on how users browse. In the short term it brings you nothing, but over the long run, only this data can make the service better and better."

Whether personal data should be traded for better service has no absolute answer. Apple has taken the opposite position from Google's; the data users keep with Google has grown less and less secure.

WeGene will have to consider and face the same question as its user data keeps growing. For now, that data mostly goes into research it conducts with university institutions.

"The differences between ethnic groups are large. Much of the world's genetic research is built on testing data from white populations, and the work we are doing on East Asian genomes can correct some of that bias."

WeGene's research section often runs questionnaires: "Do you have an alcohol dependence gene?" or a survey of how Chinese people feel about the taste of cilantro. Jining Medical University is WeGene's long-term research partner, and after filling in a survey, each user later receives a report on what the findings mean for them.

Rather than buying a genetic testing service, you are buying a snapshot of where genetic research on public health stands right now — and the report's conclusions will change as academic research moves on.

So who is willing to pay for this genetic testing service?

Who, exactly, hands over 1,000 yuan for a service that can give you no practical guidance?

Martin Cui is a Chinese Canadian who grew up in Vancouver and works as a teacher. Over the past two years he moved back to Hong Kong for work and bought WeGene's service, then talked more than 20 people around him into getting tested too.

A decade before he had his genes sequenced, Martin spent several months visiting Cui-surname villages all across Guangdong, digging up local clan genealogies and studying them systematically. Along the way he met many Cui "brothers" and set up an 80-plus-member Jiangxi-Guangdong Cui Brothers group chat, along with the official accounts Cui Family Network and Guangdong Cui Clan Association. Every Qingming Festival, Martin organizes a thousand or more people surnamed Cui to return to their ancestral villages together and sweep the family graves, learning their own history and their family's.

"I'm Chinese, and I often feel I have no roots. I wanted to use this — tracing ancestry — to find my roots." For Martin, buying WeGene's service was not simply entertainment; it was closer to a wish he had held for a long time. Overseas Chinese like Martin make up about 20% of WeGene's users. On Facebook they have set up a WeGene User account of their own, where they post their test results in the group, and some have actually found Chinese people they are related to.

Most of the rest live in China's first-tier cities and are well educated. They come mainly out of curiosity about their own health, or a keen interest in genetic testing. Of the WeGene users QDaily tracked down, most either hoped to work in the genetics industry or had been recommended the service by a friend.

One user, who asked not to be named, said that before trying WeGene he had also used consumer genetic tests from Yimai Jiyin, Jiyinmao and BGI's alcohol test. Those cost less, 200 to 300 yuan, but usually read only a dozen or so loci.

"Comparing them, WeGene's report really is one of the more thorough in the industry, especially on ancestry — WeGene is probably the only company in China doing it."

Buying a genetic test has stayed a niche habit these past few years. But back in 2013, Angelina Jolie had a preventive double mastectomy because she carried a cancer-causing gene, the news quickly became a topic of conversation everywhere, and genetic testing entered the public mind for the first time.

The explosive growth of genetic testing companies rests mainly on technology

Almost every company selling genetic tests to ordinary consumers was founded between 2014 and 2015. WeGene was no exception. In those years, genetic testing startups multiplied explosively.

What drove that growth was progress in the testing technology. In 2005 the biotech company Illumina developed Solexa, and the American firm Applied Biosystems (ABI) launched SOLiD. Both are classed as next-generation sequencing (NGS), also called second-generation genetic testing technology.

What they share is a drastic cut in the time and cost of testing. In 2001 a single sequencing run cost as much as US$100 million; today it costs US$1,000. That collapse in price pushed the technology toward large-scale, commercial use.

By 2014, Illumina, the best-known maker of gene sequencing machines, released a new high-end sequencer that could read a whole genome accurately and brought the cost below 1,000 yuan. Most Chinese gene companies have to build their own services on the technology of upstream equipment makers like Illumina.

The custom gene chip method WeGene uses is now common in services that need to read only specific loci, and it costs less than the whole-genome sequencing that second-generation technology offers.

QDaily's editors tried WeGene's analysis service too. We had in fact bought 23andMe's product beforehand, but because it aims mainly at the US and European markets, its conclusions do not necessarily fit East Asian populations — it would tell you in the report, for instance, that you are 99.8% Chinese by ancestry.... WeGene accepts imported 23andMe data and analyzes it free. So without spending a cent, we got a more detailed report built for East Asian populations.

We even got an unexpected private message from a user with the same surname, and wandered into a Jiangxi-Guangdong Cui Brothers group chat, learning about shared ancestry and history among a crowd of strangers who share our name.

This service has a knowledge barrier, and educating users is the hardest part

But the industry is still not especially bullish on genetic testing for mass consumers. Two objections come up again and again: the business model is still unclear, and users are hard to educate.

Zhang Xudong, founder of GENETV, which provides genetic analysis services specifically for research institutions, believes: "Among the directions tied to genetic testing technology, the user base for consumer-facing services is still too limited. What people are more optimistic about is still services for corporate clients."

In gene sequencing, the upstream equipment business is almost entirely held by American and European companies; Illumina's sequencers alone hold 71% of the market.

Among midstream and downstream services, the segment raising the most money and adding companies fastest is clinical diagnosis and treatment: early cancer screening, prenatal checks, preconception and prenatal care. Because some gene mutations cause disease, testing is an effective way to catch cancer and treat it in time. Angelina Jolie's preventive double mastectomy rested on this kind of test.

In a genetic testing report aimed at mass consumers, whether it is telling you which talents you have above the average person or what hereditary disease you risk, those traits are usually controlled by several gene loci and shaped by outside factors as well, and are bounded by the state of academic research and the samples it draws on. The results are often only probabilities, and not necessarily accurate.

For Chen Gang, the hardest thing is "educating users." "Genes are already a very complicated scientific problem. You probably need some grasp of technology, and to be in the white-collar class." WeGene's redesigned website shows the effort: pictures, Q&As and videos, all trying to explain what this service actually is.

But even once it is explained, how do you persuade people to hand over 990 yuan for a report that cannot, at this stage, help them in any substantial way — a service that looks more like a byproduct of genetic technology's progress, a running account of scientific findings... That is the problem facing this company selling genetic tests to the public.

Cover image courtesy of WeGene