|
By Mark Terry
Writer - Washington G2 Reports
01/24/08
Executive Summary
The direct-to-consumer (DTC) laboratory testing market, including at-home genetic testing, is estimated at less than $100 million in annual revenue out of the overall $51.7 billion U.S. laboratory testing market, according to several industry experts and Washington G-2 Reports. It is defined here as being comprised of "traditional laboratory-based" DTC testing and at-home genetic testing.
In the traditional laboratory DTC testing area (excluding at-home genetic testing), there are half a dozen companies operating with a combined annual revenue of $15 million to $20 million. Though a small segment, it appears to be growing at 15% to 20% annually, driven in part by the approximately 45 million uninsured Americans and the aging of the baby boomers as they begin to retire. This part of the DTC (sometimes also referred to as direct-access-testing or DAT) testing market consists of several overlapping components-including routine laboratory testing that does not require physician referral; point of care (POC) testing; and over the counter (OTC) testing such as CLIA-waived laboratory tests, pregnancy tests, and insulin test strips. POC and OTC testing, however, are very different markets with different revenue and business models than DTC testing.
At-home genetic testing, addressed in this report as an adjunct to traditional DTC testing, is a larger market than traditional DTC, with closer to 20 companies operating in the U.S. and an estimated total revenue of $80 million. However, the regulatory pressures on genetic testing are more stringent than on traditional laboratory testing, which will slow its growth in the marketplace. Another factor affecting at-home genetic testing is that the complexity of most genetic tests requires higher costs per test, allows fewer opportunities for automation, and often requires trained medical practitioners to assist in interpreting the test results. There is widespread skepticism among the healthcare community as to the clinical validity of some genetic testing; it is also an area that has already shown signs of being a potential breeding ground for consumer fraud.
At-home genetic testing has sparked some venture capital interest from the likes of Google and other companies. Most notably, Google invested $3.6 million in an at-home genetic testing company, 23andMe. 23andMe, however, does not advertise itself as a medical laboratory service, but as a sort of genetic variation on Internet social website phenomena such as MySpace and Facebook. The business models for these sorts of companies are a little unusual, and because of their expense-often close to $1000 per test kit-are not targeted at the same market as the traditional DTC lab testing, i.e., the uninsured or simply health conscious.
The typical DTC company operates via the Internet and through a national network of patient service centers. Quest Diagnostics attempted its own DTC component called QuestDirect in 2001, but shut it down in 2006, citing poor performance. Most DTC companies utilize LabCorp or Quest Diagnostics as the actual laboratories that conduct the tests, utilizing each company's patient service centers. In that respect, most DTC companies are acting as middlemen or laboratory test brokers, hiring lab services and selling them to the patient. Both at-home genetic testing and DTC testing fall under the same regulatory umbrella as any clinical diagnostic laboratory does, i.e., CLIA. However, DTC is not permitted in all states. Twenty-five states and the District of Columbia allow DTC testing; 13 states have banned it; 12 states have limited DTC testing. States that ban DTC testing typically have a requirement that laboratory tests be requested by a licensed physician. States that limit DTC testing generally place limits on the types of tests that can be requested directly by the consumer.
Defining DTC Laboratory Testing
Direct-to-consumer (DTC) laboratory testing has a number of different names including direct-access testing (DAT), patient-authorized testing, physician-assisted testing and consumer-initiated testing. In essence, it is laboratory testing that is initiated by the consumer (patient/customer/client) rather than initiated by a physician on behalf of a patient.
Typically the DTC company acts as a middleman or broker for laboratory services; most operate via website. Patients visit the website, choose the test they wish to have performed-for instance, a cholesterol test-and are directed to a nearby patient service center to have their blood drawn. Often the test itself is actually performed by a reference laboratory (most often LabCorp) and the results are provided to the DTC company, which either notify patients via e-mail or offer a website where patients can acquire their results using an identification number.
One of the primary controversies surrounding DTC testing is the apparent lack of involvement of a medical professional. John Bell, chief executive officer of Direct Laboratory Services Inc. (Mandeville, LA) emphasizes that his company does, in fact, have physicians involved. "We have the doctors as medical directors who look over the orders, per se, and review the client results, so there is a doctor involved. But we're doing it on a volume basis and not on a one-on-one basis like the person going to the doctor." For every state where the company's testing is available, it has a physician licensed in the state.
Although a full-service laboratory like Quest Diagnostics or LabCorp can offer a test menu of over 4,000 laboratory tests, DTC companies typically offer a limited number of discounted tests at high volumes. According to Private MD Lab Services, most common DTC/DAT tests are:
- HIV-1 antibody test
- STD panel
- Complete blood count with differential
- Chlamydia and gonorrhea test
- Herpes simplex virus (HSV) type II IgG
- Herpes simplex virus (HSV) type I and II IgG
- Syphilis test
- Thyroid profile with TSH (thyroid stimulating hormone)
- Liver function profile
Two things stand out about these tests. First, six of the nine tests are for a form of a sexually transmitted disease, which suggests that privacy issues are of concern to the patients; and second, the majority of these tests can be performed on an automated platform, allowing for higher efficiency for the laboratory performing the tests.
Clarifying the Market
By its broadest definition, there are two types of direct-to-consumer testing. They are laboratory services requested by the consumer and medical devices such as pregnancy tests and blood sugar test kits for diabetic patients. This second category is sometimes called OTC testing or at-home testing. OTC testing has a very specific market niche that is significantly different from that of typical DTC testing. As a result, it also has a significantly different impact on the clinical laboratory testing market. OTC testing also overlaps-or even falls into the category of-POC testing, which not only involves tests purchased at the local drugstore, but may also those that may be performed in the physician's office, such as tests for Strep throat, diabetes, pregnancy, etc.
Because of the significant difference between the regulatory and market environments for DTC testing versus OTC/POC testing, this report will focus entirely on DTC testing, except when it discusses genetic testing.
Market Size and Differentiation
Washington G2 Reports' Laboratory Industry Strategic Outlook 2007 estimates total U.S. laboratory industry revenue as approximately $51.7 billion in 2007.
Laboratory Industry Revenue, 2002-2007 ($BB)
- 2002 = $38.1
- 2003 = $40.1
- 2004 = $42.7
- 2005 = $45.5
- 2006 = $48.5
- 2007 = $51.7
Source: Washington G2 Reports' Laboratory Industry Strategic Outlook 2007
Bell notes that his company brings in approximately $3 million in annual revenue and estimates that the industry has combined revenues of less than 1% of the laboratory industry, i.e., approximately $500 million.
Dave Robertson, director of the American Health Assessment Alliance (AHAA, formerly the Direct Access Testing Association), says, "I think it's probably such a small portion of the total industry it's not even measurable."
The U.S. lab industry is broken into four broad categories: hospital labs, independent/commercial labs, physician office labs, and "other." Other laboratories include nursing homes, ambulatory surgery centers and home health agencies. It would also include DTC testing. Other labs accounted for 6% of the total U.S. laboratory industry, or approximately $2.9 billion. As Bell observed, if the DTC market actually approaches $500 million, it accounts for 1% or less of the overall U.S. laboratory test market. In fact, Bell suspects there are so few successful operators of DTC businesses that the total revenue in the U.S. is closer to $15 million to $18 million annually, which would account for less than 0.035% of the U.S. laboratory market revenues.
Laboratory Industry Market Share by Revenue, 2006
- Hospital =54%
- Independent = 35%
- POL = 5%
- Other = 6%
DTC companies are very volatile. Although Bell's company, Direct Laboratory Services, has been in existence in its present form since 1990 (and in a different version of laboratory testing since 1984), he notes that the AHAA, a non-profit organization representing members of the DTC business, only has about six members. "A lot of new DTC companies just don't have the resources to stay in the business. They're in and out within two years. They have more of a negative effect on the industry, in my opinion, because they think there's a quick buck in it, which there is not."
What can make this observation a bit more complicated is who the actual providers of laboratory testing are. Essentially there are three test providers:
- The DTC company itself, which acts as a laboratory test broker.
- The laboratory that actually does the laboratory tests, which is typically LabCorp, a major independent reference laboratory.
- In a few cases, hospitals and independent reference laboratories have created their own DAT service.
Testing Services-Case Studies
Quest Diagnostics
In keeping with Bell's comments about volatility, the DTC landscape is littered with more than the corpses of smaller companies. None other than Quest Diagnostics itself attempted in 2001 to open a DAT/DTC component called QuestDirect. It was originally launched in Salt Lake City, UT; Billings, MT; Colorado Springs, CO; Denver, CO; Fort Collins, CO; Greeley, CO; Kansas City, KS; and Pueblo, CO.
QuestDirect offered 25 health tests, called QuesTests that included tests for cholesterol, allergy tests, health profiles, and osteoporosis risk tests. The tests were priced as low as $20 for single tests and up to $150 for comprehensive health profiles that included eight different tests.
In a June 20, 2001, press release, Hughes R. Bakewell, Jr., Quest Diagnostics' vice president for consumer health, was quoted as saying, "QuestDirect taps directly into the megatrend that's hitting the health care world-more empowered consumers choosing to take control over their own health, just like they've taken charge of their own personal finances."
In March 2006, Quest Diagnostics shut down QuestDirect, citing poor sales performance.
LabCorp
As mentioned earlier by Bell, the primary lab provider for DTC companies is LabCorp. The reason for this is straightforward: DTC companies now operate nationally via the Internet and, as a result, need a national network of service centers where patients can have blood drawn or provide urine. Bell says, "We primarily use LabCorp and have Quest as a backup, as needed. They're the only two labs we can work with because they're the only two labs that have a national network of patient service centers, and that's important for delivery."
Bell notes that although companies like his typically have a component that goes out to health fairs and similar lab test environments, that's "not the main part of our business by any means. We're just brokers of lab services. We buy it at one price and sell it at another for a very, very reasonable price."
Bell also notes that one reason Direct Laboratory Services does not work much with Quest Diagnostics is "because their pricing is not conducive and their delivery system isn't conducive to what we're trying to do right now. The problem we ran into with Quest was they wouldn't ‘panel' anything. In other words, most of our major tests are panels. Quest wouldn't give us a panel price, they gave us an itemized price, which made it quite a bit higher than what LabCorp quoted us on the panel. Otherwise, individual tests are essentially the same on either lab."
Parkview Health Laboratories, Fort Wayne, Indiana
Parkview Health Laboratories is a full-service laboratory affiliated with Parkview Health System in Fort Wayne, Indiana. It provides laboratory services for the seven hospitals in the Parkview Health System as well as numerous patient service centers. Parkview Health Laboratories also has a DTC program called QuickView Direct Access Testing.
Alice Friedt, MT(ASCP), director of laboratories, says, "An individual who wishes to have a test can go to one of our six draw sites-not in one of our hospitals, but at one of our outreach draw sites. We have a list of tests they can choose from. They sign a form that basically says that they understand these results are not going to be sent to a doctor and that the patient is responsible for those results. After signing the waiver and choosing the test they want, they pay cash up front and we draw the blood and send the results to them."
Parkview offers 20 laboratory tests, which are:
- Blood count (complete)
- Blood type
- C reactive protein (CRP)
- Calcium
- Cholesterol
- Glucose (blood sugar)
- Hepatitis C
- Homocysteine
- Iron
- Iron profile
- Lipid profile (12-hour fasting required)
- Mono screen
- Platelets
- Pregnancy
- Prostate specific antigen (PSA)
- Rheumatoid arthritis
- Rubella
- Triglyceride (12-hour fasting required)
- Vitamin B12
- Urinalysis
The QuickView Direct Access Testing website (http://www.parkview.com/body.cfm?id=434 ) specifically states that HIV, drug, and alcohol tests are not available.
Friedt notes that because they are part of a health and hospital system, the tests offered had to be approved by their medical staff.
Friedt says their rationale for starting the program wasn't money, but rather need. "We felt there are patients who want to be very proactive about their health and monitor things about their own health. We also wanted to give access to patients who didn't have insurance and wanted to give them a way of obtaining some basic laboratory tests."
It is not, however, a large-volume area of their laboratory. The program has been in existence for approximately three years and has served only about 80 patients in the last year. Friedt says, "It's done because we felt there was a need out there, but it's not a huge moneymaker. We market it through our website, but we don't otherwise specifically market it. It's very easy to manage, so there's no reason not to do it, and it does seem to fill a need for some patients."
Prices are slightly lower than they would be via physician-referred tests because it's a front-pay, cash-up-front transaction and doesn't require the involvement of the laboratory's normal billing or insurance processing program.
Friedt thinks that the relatively small amount of business Parkview's program conducts is partly due to the Fort Wayne area, which has a very active health fair program in the community. "There are other avenues for patients. Industries in the Fort Wayne area are very proactive in doing health screens for their employees, and we also have Focus On Health, which does a lot of health screens. So there are probably another 20,000 people out there having screens done through health fairs and similar programs in the area, so the need for this is much smaller than it is in a lot of other areas."
Personalized Lab Services
Personalized Lab Services (Dunedin, FL) has been in existence for two years. It is the model for most current DTC companies-a web-based, cash business focusing on a limited number of tests. Todd Myers, managing member, says, "Personalized Lab Services is a company that focuses on selling testing-either in the form of individual kits or through lab testing in clinical laboratories-that is accessible to the public. Our concept primarily is that we're able to give those without insurance and those that are interested in alternative health practitioners or an alternative healthcare system an opportunity to get the same tests that would be ordered by their doctor and paid for by their insurance."
Personalized Lab Services has two separate and distinct business units. One is the laboratory business and the other is an in-home testing business. They employ one physician who is licensed in 33 states, as well as five additional staff members who look at laboratory results. There are five more involved in administrative matters.
Myers notes, "The main labs that offer testing have to maintain a pricing structure so that, after the billing and discounts, the doctor is still making money, the lab is making money, and the insurance company is making money. Through our volume we're able to negotiate lower prices for these tests, usually about 30% of what the retail price is, and pass it along as a savings to the client because the client pays cash."
Regulatory Environment
DTC/DAT testing is somewhat controversial in the medical industry because it essentially removes the physician from the equation. However, CLIA regulates the laboratories that perform the tests, not the individual ordering the tests or receiving the test results. As a result, at the federal level, the same regulations that oversee any clinical diagnostic laboratory in the U.S. oversee DTC/DAT testing.
However, as explained above, individual states may-and often do-have laws that regulate who can order a laboratory test and limit the availability of direct access testing. Typically, if a state bans DTC testing, it does so because the state requires a licensed physician or "other authorized person" to order the tests. DTC companies work around this by having physicians licensed in those states on staff or acting as consultants.
In cases where DTC is limited, it is often limited to specific types of tests. For example, Arizona legislates which tests can by ordered directly by consumers. Otherwise only health professionals are permitted to order tests, and the laboratories must report the results directly to the person ordering the tests.
California, another example, authorizes for specific tests: "pregnancy, glucose level, cholesterol, occult blood, and any other test for which there is a test for a particular analyte approved by the federal Food and Drug Administration or sale to the public without a prescription in the form of an over-the-counter test kit," which also includes HIV tests.
DTC Testing By States
| Permitted |
Banned |
Limited |
Alaska
Arkansas
Delaware
District of Columbia
Indiana
Iowa
Kansas
Louisiana
Minnesota
Mississippi
Missouri
Montana
Nebraska
New Mexico
North Carolina
North Dakota
Ohio
Oklahoma
South Dakota
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
|
Alabama
Connecticut
Georgia
Hawaii
Idaho
Kentucky
Michigan
New Hampshire
Pennsylvania
Rhode Island
South Carolina
Tennessee
Wyoming
|
Arizona
California
Colorado
Florida
Illinois
Maine
Maryland
Massachusetts
Nevada
New Jersey
New York
Oregon
|
Source: Genetics and Public Policy Center
At-Home Genetic Testing
The Regulatory Environment
Although DTC laboratory companies seem to be volatile and few in number, one area of DTC testing that seems to be taking off is genetic testing. The reasons for this are the nearly simultaneous completion of the Human Genome Project and the availability of the Internet access in most U.S. households.
An aspect of DTC/DAT that is both troubling and problematic is when a DTC company uses the test results as an inducement to purchase a product. This has been most notable in the areas of "nutrigenomics." Laboratories offering these tests claim to offer their clients information they can use to tailor their diet and exercise activities to address their genetically determined health risks. In 2006, the U.S. Government Accountability Office (GAO) investigated the legitimacy of these claims by creating "fictitious consumers" and submitting 12 DNA samples from a woman and two samples from an unrelated man and using various descriptions of this DNA as coming from "adults of various ages, weights, and lifestyle descriptions."
As the GAO report indicated, "The results from all the tests GAO purchased misled consumers by making predictions that are medically unproven and so ambiguous that they do not provide meaningful information to consumers. Although there are numerous disclaimers indicating that the tests are not intended to diagnose disease, all 14 results predict that the fictitious consumers are at risk for developing a range of conditions…. However, although some types of diseases, such as cystic fibrosis, can be definitively diagnosed by looking at certain genes, the experts GAO spoke with said that the medical predictions in the tests results cannot be medically proven at this time. Even if the predictions could be medically proven, the way the results are presented renders them meaningless. For example, many people ‘may' be ‘at increased risk' for developing heart disease, so such an ambiguous statement could relate to any human that submitted DNA."
Two of the four companies the GAO investigated then suggested the patient purchase dietary supplements. One of those two suggested "personalized" dietary supplements that cost approximately $1,200 a year. The GAO analyzed the supplements and found them to be equivalent to vitamins and antioxidants available at the grocery store for $35.
A third company suggested the "patient" purchase a product that repaired damaged DNA, although experts who analyzed the offer indicated there is no such product in existence. Three of the four companies provided advice that was so simple and generic as to be useless and largely unrelated to any genetic analysis:
"In addition, results from the tests that GAO purchased from Web sites 1, 2, and 3 do not provide recommendations based on a unique genetic profile as promised, but instead provide a number of commonsense health recommendations. If the recommendations were truly based on genetic analysis, then the nine fictitious consumers that GAO created for these sites using the female DNA should have received the same recommendations because their DNA came from the same source. Instead, they received a variety of different recommendations, depending on their fictitious lifestyles. For example, when GAO created lifestyle descriptions stating that the consumers smoked, they received recommendations to stop smoking. In contrast, if GAO said the consumers never smoked, they received recommendations to continue to avoid smoking."
Genetic testing is even more problematic than routine laboratory testing for the DTC market. On July 27, 2006, Kathy Hudson, Ph.D., director of the Genetics and Public Policy Center at Johns Hopkins University, testified before the U.S. Senate Special Committee on Aging on the issue of "At Home DNA Tests: Marketing Scam or Medical Breakthrough?" In her testimony she stated:
"Inadequacies in the current oversight of genetic testing identified by the Center and in the GAO report threaten more than the public's pocketbook-they threaten the public's health. The current regulatory environment fails to ensure the quality either of the laboratories performing genetic testing or of the tests they are offering. While these gaps affect all genetic tests, the ramifications of the current gaps in oversight are particularly evident with respect to some of the tests being offered directly to consumers."
Hudson notes that genetic testing is typically high-complexity and requires higher levels of clinical and analytic validation by CLIA than routine laboratory tests and often requires genetic counseling to interpret the results. She indicates that the arguments against DTC genetic testing are:
- Genetic information is complex
- Consumers lack the necessary knowledge of genetics to understand the test results or place them in proper context
- Consumers run the risk of misinterpreting test results and as a result may make bad healthcare decisions.
She then notes that there are no concrete data or studies supporting the claims that these are actually causing problems. That isn't to say that they aren't, just that there has been little or no research into the actuality of the claims. "However, in the context of the current regulatory environment, direct-to-consumer testing may pose real risks to consumers. Absent safeguards to ensure that the laboratories performing tests are competent to do so, that the tests provide clinically relevant information, and that the claims made about tests are accurate and balanced, consumers have no reliable basis to make informed decisions about the benefits and risks of testing. While some DTC companies may be using only high caliber laboratories and offering only tests generally recognized as clinically valid, there is no way for a consumer to distinguish between the decent and the dubious."
It is also noted that there are only 2,000 to 3,000 trained genetic counselors in the United States. If DTC genetic testing were to take off, there would be a clear deficit of trained individuals to assist in test interpretation.
The Federal Trade Commission (FTC) has weighed in on the subject of at-home genetic tests in a report titled "At-Home Genetic Tests: A Healthy Dose of Skepticism May Be the Best Prescription." The report says:
"According to the Food and Drug Administration (FDA), which regulates the manufacturers of genetic tests, and the Centers for Disease Control and Prevention (CDC), which promotes health and quality of life, some of these tests lack scientific validity, and others provide medical results that are meaningful only in the context of a full medical evaluation. The FDA and CDC say that because of the complexities involved in both the testing and the interpretation of the results, genetics tests should be performed in a specialized laboratory, and the results should be interpreted by a doctor or trained counselor who understands the value of genetic testing for a particular situation."
Healthcare or Sideshow?
In late 2007, two companies entered the fray: 23andMe.com and deCODEme.com. Both companies are Internet startups that offer genetic testing-of sorts. Both are touting their services as a sort of genetic or scientific version of online social websites like MySpace or Facebook. In other words, the consumers who participate can see how they are genetically related to other members.
23andme.com, in particular, was newsworthy in that it had financial backing from search engine company Google, genetic engineering firm Genentech, and VC firm New Enterprise Associates. Google's investment was $3.9 million dollars. Total investments are estimated at about $10 million. Another competitor is Navigenics, which has $25 million in venture capital from Kleiner Perkins Caufield & Byers, Sequoia Capital and Mohr Davidow Ventures.
For now, anyway, 23andMe is careful to steer clear of calling itself a healthcare laboratory testing company. It makes no claims to interpret test results or offer risk assessments for diseases. Although both companies ensure the personal genetics data is secure, they also indicate they intend-when their databases are large enough-to aggregate genomic data that will be made available to outside sources for study.
It should be pointed out that Google's investment in 23andMe is, to say the least, a little odd. First, Google doesn't have a track record of investing in start-ups, particularly in companies that might be deemed healthcare companies or biomedical technology companies. They have invested in Wi-Fi start-ups, FON, Meraki, and Current, which deliver high-speed Internet access using existing power outlets, but 23andMe is definitely a change in direction. Secondly, the co-founder of 23andMe is Anne Wojcicki, who is married to Sergey Brin, the co-founder of Google. In addition, Sergey Brin had extended a personal loan of $2.6 million to 23andMe during its initial start-up; $2.6 million of Google's $3.9 million investment in 23andMe was used to pay off the loan. Potential conflicts of interest aside, Google spokespeople say that 23andMe was an interesting and potentially profitable company to invest in.
This trend-which may not be a trend at all-of venture capital firms investing in genetic testing startups won't last for long if at-home genetic testing goes the way many of the DTC laboratory test companies have gone. The VC firms (and Google) seem to be investing in the possibility that consumers will be interested in having their complete genome analyzed and that something useful and practical from a healthcare point of view might someday be made of that information. One potential profit strategy of these companies may be to eventually sell the aggregate data to researchers or big pharma; however, 23andMe has indicated although it expects eventually to make the aggregate data available to researchers, it won't sell the data. Meanwhile, 23andme.com is selling its at-home genetic testing kit (or membership in its genetic social website, if you will) for $999. deCODEme.com is offering its genetic testing kit for $985.
That said, there are quite a few companies offering some version of at-home genetic testing.
The DTC Universe
Analysis
At the moment, DTC testing remains a very small slice of the overall clinical diagnostic pie. Even if you include the revenue from the at-home genetic test companies, it's unlikely the total annual revenue tops $100 million. That said, Bell notes that his company has shown strong growth lately of 15% to 20% per year. Two factors encourage that growth. First, approximately 45 million people in the U.S. have no insurance coverage. A relatively inexpensive way for them to acquire basic laboratory testing without having to also pay for a physician's office visit has appeal. Secondly, the baby boom generation is just starting to retire, edging into its early sixties. This generation not only is very large, but its members have shown a propensity toward an interest in their own healthcare. Being able to monitor it themselves-and possibly also retiring prior to Medicare kicking in-may account for at least some of the growth.
Another factor behind this growth is probably word of mouth. Bell notes that the one thing the DTC industry needs is the ability to promote its concept on national television in the same way the drug industry (and to a limited extent, some of the clinical lab industry) does. However, since few if any of these companies have revenue greater than $3 million, this is unlikely to happen unless a venture capital firm decides to jump in with large resources the way some have done with at-home genetic testing companies. Even then, it's not clear if the increase in business would justify a multimillion-dollar advertising campaign. That might explain why neither Quest nor LabCorp have thrown money into large-scale support of their own DTC clients.
Which brings up a dichotomy. At the prices for which the at-home genetics companies are offering their test kits-especially 23andMe and deCODEme-they would seem to be completely ignoring the uninsured market. Of course, it's unlikely that insurance companies would cover whole-genome screening until clinical utility is validated. However, it does bring up the question of who the at-home genetics companies view as their market. Is it the health conscious or the wealthy and genetically curious? Who else would be willing to pay a thousand dollars for a genetic test that has no apparent medical use?
At the moment there's a bubble of venture capital interest in the at-home genetics test market, but Washington G2 Reports speculates that this will slow down considerably unless these companies come up with a way to make money and continue to grow. Given that the regulatory environment for genetics testing is constantly evolving, Washington G2 Reports predicts that after initial enthusiasm from investors and the media, the reality of meeting CLIA and HHS regulations, as well as finding a steady stream of cash-paying customers, is going to slow growth significantly.
Also, as mentioned before, the DTC lab testing environment is very volatile, with more start-ups failing than making a go of it. This is likely to affect the at-home genetics test market as well, especially since DTC labs work on a low-margin, high-volume business model. Genetics tests, in general, are difficult to perform on a high-volume basis because of their complexity.
Washington G2 Reports does, however, see DTC for traditional lab tests as a potential growth market. The number of uninsured in the country isn't likely to change for the better in the near future, and the baby boomers are just getting started. There's a certain stigma attached to it because of the apparent lack of physician involvement, but the successful DTC companies are working hard to make it clear that doctors are involved; abnormal tests are flagged, and clients are urged to discuss those results with their own physicians. DTC testing on a large scale, however, is dependent on a national network of patient service centers or an efficient sample transportation network. At the moment, Quest Diagnostics and LabCorp are the only two companies that provide both of those in a reliable manner, and Quest Diagnostics has essentially dropped out of the business.
|
