The Landscape of Genetic Testing

Genetic testing is one of the fastest-growing fields in biotech, with a global market estimated at over US $10 billion in 2020. Due to the technological advancements in next-generation sequencing (NGS), genetic testing is expected to continue the rapid expansion into various disease areas and regional markets in the coming years. In this article, we will explore the growing landscape of genetic testing. Specifically, we will dive deeper into the various segments of the genetic testing market, learn about the key trends of the field, and analyze some of the existing business models.

Market segmentation

The current genetic testing market is segmented into five groups based on the type of service provided, including (1) predictive and presymptomatic testing, (2) reproductive testing, (3) diagnostic testing, (4) pharmacogenomic testing, and (5) wellness and ancestry testing. Most genetic testings require prescriptions from healthcare providers, with the exception of the last category, which markets under a direct-to-consumer (DTC) model.

Predictive and presymptomatic testing is focused on detecting mutations associated with disorders that occur later in life. It is often offered to those with a family history of genetic disorders but without symptoms at the time of testing. Predictive testing identifies mutations that might increase a person’s risk of developing hereditary genetic disorders such as cancer, cardiovascular, or metabolic diseases. Presymptomatic testing determines the risks of a person developing a genetic disorder prior to the development of symptoms. Reproductive testing includes carrier, prenatal, and newborn testing. Carrier testing identifies individuals who carry one copy of a mutation that can lead to a genetic disorder when both copies are inherited. When both potential parents are tested, carrier testing offers information regarding a couple’s risk of having a child who will be affected with a hereditary genetic condition. Prenatal testing establishes chromosome or nucleotide changes in a fetus prior to birth, while newborn identifies genetic disorders just after birth.

Diagnostic testing is often used to confirm a diagnosis of a suspected disease based on physical signs and symptoms. Once a diagnosis is established, the genetic causes of the disease can be determined and predictive or carrier testing can be retrospectively performed on additional family members. Cancer, cardiovascular, and neurological disorders are the most common disease areas for diagnostic testing. In addition, companion diagnostics and targeted therapy can be applied to ascertain the best treatments for patients. Similarly, pharmacogenomic testing is used to understand how genetic polymorphisms affect a person’s metabolism and response to specific medications. Pharmacogenomic testing helps figure out the types of medication and dosages best suited for a patient, as well as predicting whether or not adverse events could be elicited by a drug.

Finally, wellness and ancestry testing provides one with information regarding common traits or offers clues about one’s ancestry. Currently, the most popular wellness tests implement genetic variations to predict health conditions, such as the risk of developing type II diabetes or Alzheimer’s disease. However, the health risks and ancestry information provided by DTC services mostly lack actionable health insights. Since wellness and ancestry testing often operates under a DTC model, the process supplies genetic information without involving healthcare professionals or insurance companies. In addition, there is currently little regulation of DTC services, rendering the service and product quality largely unstandardized.

Key market trends

The global genetic testing market in 2020 was around US $10B, and is expected to surpass US $20B in 5 years, with a compound annual growth rate (CAGR) of over 10%,, . The reproductive testing segment accounted for the largest revenue share in 2020, and is expected to dominate the market in the coming 5-10 years due to the increasing awareness of early detection and adoption by healthcare providers,. Diagnostic and pharmacogenomic testings are forecasted to experience the highest CAGR, largely due to the increased application of personalized medicine and targeted therapy across the globe.

On the other hand, the market for DTC genetic testing is also anticipated to increase worldwide. Despite the concerns over data privacy, assay quality, result validity, and the lack of actionable insights, DTC testing continues to gather significant attention among consumers due to the increase in user awareness, online marketing, the rise in disposable income, and decreasing costs. The increase in the aging population is yet another driver that could further bolster the DTC market as these tests can identify polymorphisms that increase the risk of age-related diseases such as Alzheimer’s. Interestingly, while the global DTC genetic testing market is expected to continue expanding, recent layoffs in 2020 within the main players of the industry, including 23andMe, Ancestry, and Helix, showed a saturated market for DTC genetic testing in the US.

The US genetic testing market is valued at over US $4B in 2020 and is expected to remain dominant due to the increasing demand for personalized medicine as well as the multi-payer nature of the healthcare system. Factors including the growing government support, increasing product approvals by the Food and Drug Administration (FDA), advanced medical technology, and a high concentration of key players involved in research and development will keep boosting the US market in the coming 5-10 year period. The Asia-Pacific region is projected to be the fastest-growing market owing to its untapped market opportunities in developing countries as well as the rising geriatric population.

The genetic testing market is highly competitive and contains several established players. The continual advancement in various platforms and technologies driven by key players are likely to further enhance the competitive rivalry. In addition, several companies formed strategic alliances including acquisitions and partnerships to complement their product portfolio, collaborate on assay development, or increase their market access. For instance, Illumina acquired GRAIL in 2021 to enable the streamlined development of next-generation sequencing (NGS) assays for multi-cancer early detection (MCED). It is worth noting that the vertical integration drew scrutiny from both the Federal Trade Commission and The European Commission, citing concerns over diminishing innovation for MCED tests.

Business models

Retail of testing kits is the most common business model across all players within the genetic testing market. In the DTC model, customers can purchase directly from the genetic testing companies without involving healthcare providers. In addition, the availability of such kits in common drug stores and department stores as well as the ease of purchase via the internet enhances market accessibility.

Non-DTC players have a much more complicated life cycle, as test kits need to first be ordered by a licensed doctor and go through the reimbursement process where prior authorization is required. Oftentimes, labs have to overcome multiple denials and provide additional evidence of medical need to obtain authorization from insurance companies. Owing to the complex medical system in the US, the payers for these testing kits could be the patients directly benefiting from the care, third-party billers such as insurance companies or health agencies, or client billers, where medical providers reimburse labs for providing a testing service. With the emphasis of targeted therapy, companies can also sell companion diagnostic tests in partnership with other drug makers, or market research-use genetic testing kits for patient selection and biomarker development to pharmaceutical companies testing drugs in clinical trials.

As major players sell more testing kits, they also collect patient data to enable the build-up of proprietary databases. Genetic testing companies can utilize genotype and phenotype information to generate population-wide insights that offer enhanced or add-on analyses that make lifestyle and wellness recommendations in a pay-for-service or subscription model. These databases can also be utilized to develop therapeutics. In fact, traditional DTC companies including Ancestry Health and 23andMe each have a therapeutics team that aims to leverage their large database to identify drug targets across various indications. In 2018, GlaxoSmithKline entered a partnership with 23andMe to use its proprietary database for drug development. In 2020, 23andMe sold the rights of a psoriasis drug developed internally from their database to a Spanish company, Almirall. Similarly, Guardant Health and Foundation Medicine both offer real-world clinical-genomic datasets of over 100K patients for biopharma companies,.

While the landscape of genetic testing is highly competitive, it is worth noting that most companies focusing on genetic testing kits are not profitable, with exceptions such as Myriad. Other major players in the market are profitable largely due to additional products and services that are more established in the medical field. These include Abbott Laboratories (US), Illumina Inc. (US), Hoffmann-La Roche Ltd (Switzerland), QIAGEN (Germany), Blueprint Genetics (Finland), and BGI Genomics (China). As such, it is unclear yet which business model will generate sustainable revenue overtime, or if novel revenue streams will prove profitable.

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