The shifting economic systems and unpredictable labor market have had an effect on the most unexpected of industries. Genetic testing company 23andMe has announced layoffs at its organization, with plans to bring down its workforce by 40%. As a result, the workforce cuts will affect around 200 employees.
23andMe is in pursuit of a strategic shift away from its research business wing and the development of new therapies, and will instead focus its attention on genetic testing and selling its existing products.
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23andMe Layoffs Announced—The Genetic Testing Business Is a Tough Nut to Crack
Considering a 40% reduction in business is no easy feat but 23andMe’s employee reduction plans and its discontinuation of any development of its therapies show that the conditions are dire. The company’s job cuts will affect over 200 workers and this will cost the business around $12 million in severance pay, as well as transition and termination-related costs. On the plus side, the 23andMe layoffs should result in over $35 million in annualized savings.
The company still has therapies in development but is looking to offload those to another buyer or a company willing to license out the work. While 23andMe will no longer pursue any of the work on its therapies, it appears keen to have the work on it continue by selling the assets to a buyer that might assist with the critical research the company was involved in.
Its work includes clinical trials on drugs meant for fighting cancer and addressing tumors, so the continuation of the trial is in everyone’s best interests.
“We are taking these difficult but necessary actions as we restructure 23andMe and focus on the long-term success of our core consumer business and research partnerships,” CEO Anne Wojcicki said in relation to the news.
23andMe Strategic Shift Is Essential After the Multiple Setbacks It Has Faced Recently
The biggest blow to the company’s business came towards the end of last year when hackers managed to break into their databases and access the data of over 6.9 million users. The company’s ancestry tracing service was one of the primary products it offered to the public and this allowed them to gather very sensitive data about its users, including family trees. While the DNA records were not stolen, the hack was a very serious breach of customer privacy.
The company’s shares have fallen by more than 70% this year alone, making it apparent that change is necessary if the company hopes to survive in the long run. Wojcicki attempted to take the company private to combat the downturn but it has been met with multiple challenges.
More recently, the company’s independent directors resigned from their posts in September after they claimed that CEO Wojcicki was unable to offer them an offer worth their while. In a letter to the CEO, they wrote that they were “yet to receive from you a fully financed, fully diligenced, actionable proposal that is in the best interests of the non-affiliated shareholders.”
As 23andMe looks into job cuts and a strategic reorganization of resources, the company has a long way to go to restore itself to its former glory.
