Inside the Lab Industry

Equity Fund Acquires Controlling Stake in Ancestry.com as Demand for At-Home Genetic Testing Fades

Many believe that the boom for direct to consumer genetic testing had passed even before the pandemic began. Still, the sector is abuzz with strategic activity. In August, private equity firm Blackstone acquired a controlling interest in Ancestry.com for $4.7 billion. With sales in decline, the deal raises ominous questions and privacy concerns about Blackstone’s intentions with regard to Ancestry.com users’ data.

Background

Ancestry.com is a leader in digital family history services, with operations in more than 30 countries, more than three million paying subscribers across its Ancestry.com online properties and over $1 billion in annual revenue. Ancestry.com started in 1996 as a website for users to trace their genealogy. Nearly a decade later, the company expanded into DNA testing.

Direct-to-consumer genetic genealogy testing reached its zenith in 2018, propelling total sales from Ancestry, 23andMe, and other DTC gene testing companies to roughly $26 million. But sales of at-home testing kits have slumped since then as the market becomes more saturated. Both Ancestry and rival consumer testing giant 23andMe announced layoffs this year.

Ancestry tried to kickstart sales this August by announcing the launch of AncestryHealth, a $179 DNA testing kit that uses next generation sequencing to provide adult consumers information on their inherited health risks. That was the same month that Blackstone bought up the majority of Ancestry stock shares.

Privacy Concerns

So, why would Blackstone be willing to shell out close to $5 billion for Ancestry at a time when the future prospects for DTC genetic testing seem so dim—or at least not nearly as bright as they did two years earlier? Experts suggest the massive equity fund had something else in mind, specifically Ancestry’s enormous database of genetic information on millions of people. And those implications are not lost on advocates of personal privacy.

Some have questioned why Blackstone, the world’s largest real estate owner, with ownership stakes in Change Healthcare would want with personal genetic information of Ancestry customers. They note the difference between the Blackstone investment and GlaxoSmithKline’s $300 million investment in 23andMe in 2018, which bore fruit when GlaxoSmithKline started human trials of a cancer drug that resulted from the partnership with 23andMe.

Ancestry’s current privacy policy allows it to market new products from the company or its business partners, but then goes on to say it will not share users’ genetic information with insurers, employers, or third-party marketers without their express intent. Privacy advocates, however, say that is not enough and additional consumer protections are needed.

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