Alibaba-backed Pre­net­ics in $10m swoop for Lon­don-based spe­cial­ist in home DNA tests

The Daily Telegraph - Business - - Technology Intelligence - By Margi Mur­phy

A LON­DON-BASED com­pany has cashed in on the boom in DNA-test­ing kits by sell­ing it­self to a Hong Kong firm backed by Alibaba.

Pre­net­ics, which the Chi­nese in­ter­net re­tail be­he­moth in­vested in last year, has paid $10m (£7m) to ac­quire DNAFit, a five-year-old com­pany that sells tests de­signed to de­ter­mine a per­son’s suit­abil­ity to dif­fer­ent di­ets and ex­er­cise regimes. The com­pany sells the tests on­line and through em­ployee ben­e­fits schemes for up to £249, and has sold tens of thou­sands of the kits.

Avi Lasarow, DNAFit’s chief ex­ec­u­tive, owns just under half of the com­pany and will lead Pre­net­ics’ in­ter­na­tional op­er­a­tions af­ter the deal.

De­mand for at-home DNA test­ing kits has boomed in re­cent years and is ex­pected to be­come a $50bn mar­ket by 2026. Com­pa­nies in­clud­ing 23andMe have seen sales boom, backed by hun­dreds of mil­lions in ven­ture cap­i­tal fund­ing.

Mr Lasarow said he had pre­vi­ously turned down of­fers for out­side fund­ing or ac­qui­si­tions, hav­ing re­lied en­tirely on early in­vest­ments from friends and fam­ily, but that Pre­net­ics, which has be­come the mar­ket leader in south­east Asia, was the “right part­ner” for the com­pany. He in­sisted the cur­rent swell in sales of test­ing kits did not rep­re­sent a bub­ble.

“The bub­ble is not go­ing to burst; it’s not the dot­com, it’s pre­ci­sion medicine. This mar­ket is just be­gin­ning,” he said. Mr Lasarow pre­dicts that sales of his kits, cur­rently in 22 coun­tries, will hit up to £15m this year world­wide, from around £2m over the last year.

“The likes of Fit­bit have ed­u­cated the mar­ket; be­cause of that ag­gres­sive mar­ket­ing it’s now en­cour­ag­ing con­sumers to think: ‘What’s the next thing?’” DNA test­ing kits have been under scru­tiny for ques­tion­able re­sults and fears over the se­cu­rity of their data, but Mr Lasarow said DNAFit had been backed up by clin­i­cal stud­ies into ex­er­cise guided by the re­sults of its tests.

“We never over­sell the sci­ence. We don’t be­lieve ge­net­ics is ev­ery­thing,” he said. The firm also says it ad­heres to a strict eth­i­cal code of prac­tice. Pre­net­ics raised $40m last year in a fund­ing round led by the Alibaba Hong Kong En­trepreneurs Fund, an arm of the Chi­nese shop­ping giant fo­cused on in­vest­ments in the City. It says it has al­ready sold ge­netic tests to hun­dreds of thou­sands of peo­ple.

Its chief ex­ec­u­tive, Danny Ye­ung, said: “DNAFit is a pi­o­neer in di­rect to con­sumer ge­netic test­ing and has de­vel­oped a strong rep­u­ta­tion in the in­dus­try.”

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