UK Markets closed

Ancestry lays off 6% of staff as consumer genetic testing market continues to decline

Jonathan Shieber
Photo: Andrew Brookes/Getty Images

Excitement in the consumer genetic testing market continues to show signs of slowing down.

In the past two weeks, layoffs have hit two of the biggest consumer genetic testing services — 23andme and Ancestry — with the latter announcing in a blogpost that it would slash its staff by 6 percent earlier today.

CNBC first reported the news.

In her blogpost announcing the layoffs, Ancestry chief executive Margo Georgiadis wrote:

... over the last 18 months, we have seen a slowdown in consumer demand across the entire DNA category. The DNA market is at an inflection point now that most early adopters have entered the category. Future growth will require a continued focus on building consumer trust and innovative new offerings that deliver even greater value to people. Ancestry is well positioned to lead that innovation to inspire additional discoveries in both Family History and Health.

Today we made targeted changes to better position our business to these marketplace realities. These are difficult decisions and impact 6 percent of our workforce. Any changes that affect our people are made with the utmost care. We’ve done so in service to sharpening our focus and investment on our core Family History business and the long-term opportunity with AncestryHealth.

The move from Ancestry follows job cuts at 23andMe in late January, which saw 100 staffers lose their jobs (or roughly 14% of its workforce).

The genetic testing company Illumina has been warning of softness in the direct-to-consumer genetic testing market, as Business Insider reported last August.

"We have previously based our DTC expectations on customer forecasts, but given unanticipated market softness, we are taking an even more cautious view of the opportunity in the near-term," the company's chief executive Francis deSouza said in a second quarter earnings call.

Consumers seem to be waking up to the privacy concerns over how genetic tests can be used.

"You can cancel your credit card. You can't change your DNA," Matt Mitchell, the director of digital safety and privacy for the advocacy organization Tactical Tech, told Business Insider earlier in the year.

And privacy laws in the U.S. have not caught up with the reality of how DNA testing is being used (and could potentially be abused), according to privacy experts and legal scholars.

“In the U.S., we have taken to protecting genetic information separately rather than using more general privacy laws, and most of the people who’ve looked at it have concluded that’s a really bad idea,” Mark Rothstein, a law professor at Brandeis and the director of the University of Louisville’s Institute for Bioethics, Health Policy and Law told Wired in May.

The investigation into the "Golden State Killer" and the eventual arrest of Joseph James DeAngelo thanks to DNA evidence collected from an open source genealogy site called GEDMatch likely helped focus consumers thinking on the issue.

In that case, a relative of DeAngelo's had uploaded their information onto the site and investigators found a close match with DNA at the crime scene. That information was then correlated with other details to eventually center on DeAngelo as a suspect in the crimes.

While consumer genetic testing services may be struggling, investors still see increasing promise in clinical genetics testing, with companies like the publicly traded InVitae seeing its share price rally and the privately held company, Color, raising roughly $75 million in new capital from investors led by T. Rowe Price.