Regeneron’s Acquisition of 23andMe
In a surprising but strategic move, Regeneron Pharmaceuticals has acquired 23andMe for USD 256 million through a bankruptcy auction. This acquisition unlocks innovation potential through consumer genomics but faces complex hurdles ahead. While Lux predicted this outcome for 23andMe, we did not predict Regeneron’s interest in the company, and therefore, we examine here the risks associated with utilizing consumer genomics in the pharma sector.
A Turning Point for Consumer Genomics
Regeneron Pharmaceuticals stepped into uncharted territory, acquiring 23andMe for USD 256 million — an eyebrow-raising figure but a reasonable deal, considering the consumer genomics company was once valued at USD 6 billion. The purchase followed 23andMe’s Chapter 11 bankruptcy filing, which came after numerous challenges, including struggles with its transactional business model, a disconnect between consumer demand and DNA testing products, leadership turmoil, and a major 2023 data breach that compromised the information of 7 million customers and significantly undermined public trust.
While Regeneron has announced that 23andMe’s consumer operations will continue uninterrupted, the prime source of value lies in the company’s sprawling genotype data set, created from genetic variants, including single-nucleotide polymorphisms (SNPs), from over 15 million users across autosomes, sex chromosomes, and mitochondria. With this acquisition, Regeneron becomes the first major pharmaceutical company to take over a direct-to-consumer genomics platform, signalling a bold leap into a new model of data-driven drug discovery.
Genomics Data as the Strategic Engine
Regeneron’s primary objective is clear: to leverage 23andMe’s genetic and survey-based information to enhance its own capabilities in genomics-driven R&D. The acquisition complements Regeneron’s ongoing efforts to integrate genetics into drug development, especially when paired with its existing data infrastructure that includes DNA sequences linked to electronic health records.
However, the road ahead has clear obstacles. The value of 23andMe’s dataset is tempered by several hurdles:
Data Quality and Integration: The platform primarily uses SNP arrays to identify pervasive insertion or deletion events, which only provide partial genomic coverage.
Consumer Push Back: Consumers have a complex relationship regarding the use and application of their genetic information. While consumers have largely agreed that the potential of genetic technology is intriguing and worth innovating, there is growing fear of losing control of this inherent element of an individual, which aligns with a need to prioritize ethical and fair use of that information. Regeneron must prioritize data use transparency or face significant pushback or perhaps consumer cancellation.
Scaled data availability is not a new consideration for pharmaceutical companies, but the connection to highly individualized consumer information creates a new issue that should be addressed with an opt-in plan. The next question for Regeneron may be how much of this information would be lost with an opt-in approach? But the real risk lies in ignoring the consent question altogether — trading transparency for expedience could spark a backlash that no volume of data can fix.