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Gene analysis services expand in health-conscious Asia

Hong Kong-based startup Prenetics enters mainland China market

Hong-Kong based Prenetics generates reports showing information on people's constitutional makeup, such as tolerance of and reaction to alcohol and caffeine. (Photo courtesy of Prenetics)

HONG KONG -- Gene analysis services to examine the constitution of human bodies and the potential spread of disease are expanding in Asia.

Prenetics, a Hong Kong-based startup which has been providing gene analysis services in Southeast Asia, Europe and other markets, began operations in mainland China in April. Meanwhile, Chinese genetics testing provider 23Mofang, based in Chengdu, has raised a large amount of funding to expand its business.

While the market for gene analysis services expands as technological advances lower costs, risks associated with handling sensitive personal information are emerging.

Southeast Asia has a population of more than 600 million and "many people would look to proactively manage their health," Stephen Lo, chief financial officer of Prenetics, said during an interview with Nikkei.

Companies offering gene analysis services are increasing in Asia, where middle-income and health-conscious consumers are on the rise. But Prenetics, which has so far analyzed the DNA of some 300,000 people, is among the few exceptions in that it operates beyond national boundaries.

Utilizing knowledge accumulated in many countries, Prenetics began selling genetic profiling kits in China in April in cooperation with Berry Genomics, a leading Chinese gene analysis company.

America has led the market for consumer-oriented gene analysis services thanks to the presence of many promising startups such as 23andMe and AncestryDNA. In the U.S., 26 million people -- 8% of the population -- have undergone DNA testing. China has plenty of room for market growth, with just 0.1% of the population having taken such tests while health consciousness is on the rise.

Chinese research company Yiou Intelligence forecast that the number of DNA test users in China will soar to 56 million in 2022 from 1.5 million in 2018.

For consumer-oriented services, market leader 23Mofang has conducted tests for 200,000 people and raised a total of 200 million yuan ($29 million) in 2018. As China competes with the U.S. for technological hegemony, "Chinese companies are ferociously catching up," said Masakazu Kobayashi of KDDI Research, who is familiar with the gene business.

Originating from a laboratory at City University of Hong Kong, Prenetics was founded in 2014 by a group including Danny Yeung, founder of group-buying platform uBuyiBuy, which was subsequently acquired by Groupon of the U.S.

Prenetics has launched services in Thailand, Malaysia, Singapore and other Southeast Asian countries, and counts companies, including China's Ping An Insurance and Alibaba Group Holding and Indonesia's Lippo Group as investors.

According to Crunchbase, an American startup information platform, Prenetics raised a total of $52.7 million between 2014 and 2017. In 2018, it acquired DNAFit, a British provider of genetic testing services, for $10 million.

Genes are seen as the blueprints that shape human bodies. To test and diagnose a person's constitution, a subject rubs a cotton swab on the inside of their cheek 10 times and sends it to Prenetics. The company then generates a 46-page, graphics-rich report with the results, which can be accessed online about two weeks later, explaining in layman's terms the person's constitutional makeup, such as tolerance of and reaction to alcohol and caffeine. Advice from a dietitian is also available over the phone.

Prenetics also offers gene testing related to the risk of cancer and other specific diseases. Each test costs between $180 and $270.

Prenetics stresses the accuracy of its analyses and strict data protection policies, which stipulate that the company does not share customers' genetic information with third parties. However, it cannot judge all diathetic risks. "The most important thing is to change one's bad behavior, and DNA testing is an effective way to achieve this," Lo said.

Prenetics has partnered with insurance companies, including the U.K.'s Prudential, AIA Hong Kong and HSBC, which offer testing kits to policyholders.

The presence of "healthier customers is a win-win for both insurance companies and policyholders," Lo said, adding that Prenetics has seen revenue grow 30% to 50% annually since its launch.

A reduction in price of such tests are fueling the spread of gene analysis services. According to the U.S. National Human Genome Research Institute, an analysis of all gene information costs less than $1,000 per person -- less than 0.1% of what it cost a decade ago, with the price expected to drop further.

Gene analysis services might expand "explosively" if prices fall further, Kobayashi echoed.

The global market for in-home genetic testing services will grow to $49.6 billion in 2026, according to U.S. consulting group Arthur D. Little.

However, concerns have arisen about the sensitivity of handling DNA information. The use of DNA data obtained from companies for criminal investigations has become an issue in the U.S., while there is speculation that China is trying to build up a huge DNA database as a national project to increase control over its citizens.

In the U.S., where 23andMe obtained approval from the Food and Drug Administration in 2017 to sell the once-banned genetic test kits directly to customers, doubts still loom regarding potential mishandling of sensitive genetic information, as companies of its kind also sell genetic data to pharmaceutical companies for development of new drugs.

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