by Dr. Hsien-Hsien Lei
Posted March 5, 2008 in Business of DNA, DNA Testing
With the many genomics and genetics companies launching left, right, and center in recent months, you’d think the market is pretty robust. Not so, says deCODE CEO Kari Stefansson whose company is laying off 60 employees out of a total of 390 or about 15% of its workforce.
It is natural for us to operate the company in such a way that we can make the money that we have last longer than what we had expected to begin with. These are very simple and clear operational standpoints and it would even be wise for other companies in our community to follow our example. [emphasis added]
If what Stefansson says is true, then others like 23andMe, Navigenics, and DNATraits might be looking to tighten operations as well. Although it appears that most personal genomics companies operate with small staffs of less then 50-100, downturns in the market could mean that work is outsourced to independent contractors rather than being performed by full-time employees. (So if you’re looking for a job in the genomics industry, you know how to approach it.) However, not all companies suffer from as much pessimism as deCODE. bizjournals reported last week that Family Tree DNA led by Bennett Greenspan and Max Blankfeld saw
a profit gross revenue of around $12.2 million in 2006.
deCODE is behind several genetics products available direct to consumers including:
deCODEme – A whole genome scan using Affymetrix DNA chips to analyzing over one million single nucleotide polymorphisms (SNPs) per customer.
deCODE T2 – A genetic test for type 2 diabetes that detects a variation in the TCF7L2 gene.
deCODE MI – A genetic test for myocardial infarction (aka heart attack, coronary artery thrombosis, or coronary artery occlusion).
Given their wide range of products, it’s surprising that deCODE is suffering from cash flow problems in which earnings, balance sheet, and profits from markets are not enough for them to continue growing. Perhaps this is an indication that the market is starting to experience saturation in the number of companies and services being offered yet has not seen a concomitant rise in the number of consumers willing to pay for personal genomic services.
What’s more interesting is that the price of technology continues to drop. BusinessWeek surveyed the DNA sequencing market and found that new technologies are faster and cheaper. Soon we will even have the coveted $1,000 genome. This means that companies should have to spend less to earn more. For example, Illumina’s margins are declining and their revenues are expected to rise 35% in 2008. And production costs will continue drop as labs open up in countries with lower overhead, e.g., China. So shouldn’t it be easier to make a profit now off of personal genomics than ever before?
In any case, while 23andMe and Knome focus on the rich, famous, and elite, there is a great need to show the general public how genetic testing of all types is relevant to their everyday lives. There aren’t enough millionaires like Dan Stoicescu to fund the entire personal genomics market. Until genetic testing is widely adopted for a variety of commercial uses by a greater segment of the consumer population, the pot of profits will not be big enough to share. In 2008, we will surely see companies drop out and others consolidate.
deCODE Genetics Sinking Low...
Eye on DNA Headlines for 10 March 2008...
DNA Video: deCODEme...
SNPs on Chromosome 15 Associated with Smoking and Lung Cancer...
Affymetrix and Illumina Moving Gene Chip Manufacturing to Singapore...
DNA Video: Dr. Kari Stefansson of deCODE genetics...
Using Disposable Income for Genetic Tests...
Sorry, the comment form is closed at this time.
Search Eye on DNA
- Genetic Genealogy on Faces of America
- DNA Network Tweet Cloud
- Genetics = Real Science
- Larry David’s DNA Test
- Lopez Tonight First Late-Night Show to Offer DNA Testing
- American Genes Don’t Exist
- Knowledge about Genetic Risk is Power or is it Fear?
- Murderer Gets Reduced Sentence Because His Genes Made Him Do It
- Video: Knome’s Ari Kiirikki Speaks with Medgadget
- DNA Toys: Ben 10 and Digimon Digivice
- 100 Facts About DNA
- Salaries for Jobs in Genetics
- Fetal Gender DNA Tests Answer Common Pregnancy Question...Or Not
- How To Determine Paternity Without A DNA Test
- What does DNA mean to you?
- Eye on DNA Interview: Dr. Tzung-Fu Hsieh of RedTracer DNA Test for the Red Hair Gene, MC1R
- Books About DNA: The Crime of Reason by Robert B. Laughlin
- Genetically Modified Organisms Bring in the Cash
- Navigenics Introduces Physician Portal and Annual Insight Service
- People Who’ve Had Their Genomes Sequenced
09/29/2009 07:03 am
- Larry David’s DNA Test
11/17/2009 02:52 am
- 23andMe DNA Tests for $399, Down From $999
09/10/2008 04:33 am
- Crazy Genetic Marketing Ideas
07/05/2008 09:14 pm
- Parenting Children Using Genetic Tests
05/18/2009 02:09 am
- Business of DNA
- DNA @ Google Answers
- DNA and Disease
- DNA and Genealogy
- DNA and the Law
- DNA Around the World
- DNA Fun
- DNA in General
- DNA Inventions and Gadgets
- DNA Lab Talk
- DNA Podcasts and Videos
- DNA Quotes and Excerpts
- DNA Testing
- Gene Therapy
- Genetic Engineering
- Genetically Modified Foods and Organisms
- Jobs Involving DNA
- Personalities with DNA
- Polls About DNA
- January 2010
- November 2009
- October 2009
- September 2009
- August 2009
- July 2009
- June 2009
- March 2009
- February 2009
- January 2009
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- Scared to Health
- Mary Meets Dolly
- The Science Creative Quarterly
- Elefante Jirafa
- Dream Mom