Business

DeNA and Yahoo Japan turn to DNA analysis

Internet firms are betting their expertise in big data will pay off

by Kazuaki Nagata

Staff Writer

Genomics has been progressing at an impressive pace in recent years, inspiring expectations that it will someday become an essential part of medical care.

Two Japanese Internet firms, DeNA Co. and Yahoo Japan Corp., believe that future is just around the corner and are launching DNA analysis services.

It may seem odd that companies with no background in gene-related fields would start such services, but DeNA and Yahoo Japan say the field meshes well with what Internet companies are good at, including analyzing and handling huge amounts of data.

Moreover, if the firms amass vast quantities of human DNA information, they could help solve the genetic mysteries, thus opening up new business opportunities such as developing new medicines and treatments, analysts say.

Human DNA consists of about 3 billion base pairs that make up sequences. While most of these base pair sequences are identical among individuals, the tiny portion that differ make up individual characteristics.

These differences in sequences are called single nucleotide polymorphisms, or SNPs, and are related to disease susceptibility.

Many DNA analysis services provided by private firms look at SNPs to assess the risks of different diseases based on epidemiological studies. With DNA analysis, people can become aware of the risk and take preventive measures.

“We saw this as a medical service, which we have no relation with (on the surface). But reading letters, modifying data and providing some insight from analysis . . . this has a high affinity with the Internet and data analytics,” said Masatoshi Fukasawa, chief executive officer of DeNA Life Science Inc., a subsidiary dealing with DNA.

DeNA started a gene analysis service called Mycode on Aug. 12 that can check up to 282 disease-related conditions, including predispositions for 39 types of cancer. The service comes in three plans that cost ¥9,800, ¥19,800 and ¥29,800.

Consumers apply for the service online and receive a kit for taking a sample of their saliva. After a couple of weeks, the results will be posted online, accessible only to the individual. The firm also offers a followup service in which customers can talk to health experts and seek advice for ¥5,800 on a trial basis.

Fukasawa said the results of the gene analysis can be confusing, so they have to be presented in a way that customers can easily comprehend. Thanks to its experience in making mobile game interfaces, DeNA is good at presenting results in simple ways, Fukasawa said.

Asked why DeNA is entering the market now, he said genomics-related technology and research is evolving quickly, so waiting for the market to visibly grow would be far too late.

“I think we’ll be seeing new developments in the next five to 10 years, and their potential is really big,” Fukusawa said.

Masahiro Inoue, who leads Yahoo Japan’s health care development section, said his company likewise thinks it can take advantage of its strengths as an Internet firm in the DNA analysis business. Gene data for even one person is vast, and considering the amount of data to be collected from the business, it needs to be handled securely, Inoue said.

“We think there are only a small number of companies that can do this,” he said.

Yahoo Japan is set to launch its service in October and has yet to decide on the pricing.

The firm is teaming up with Tokyo-based Genequest Inc., which will be performing the actual DNA analysis, while Yahoo Japan’s role will include marketing, providing the results to customers online and handling the data. DeNA is partnering with the University of Tokyo’s Institute of Medical Science. It has also allocated funds to hire its own scientists and buy equipment to analyze DNA.

Some analysts say one reason why the two firms are entering the field is that DNA information is expected to be highly valuable and afford them opportunities to expand their businesses.

“By accumulating data and (analyzing it), you get opportunities to learn that certain genes are possibly causing problems in human bodies, and such findings could help create new medicine or genetic treatment,” said Satoru Takaoki, a senior analyst at SMBC Friend Research Center who watches health care and medical-related firms.

“I am not sure if (DeNA and Yahoo Japan) want to directly run medicine or treatment businesses, but they can tag along with medical institutions and pharmaceutical firms,” he said.

Indeed, there is a high expectation that DNA information will play vital roles in the future of medical care.

Francis Collins, who directed the U.S.-led Human Genome Project that deciphered all human DNA sequences, said it will be natural for individuals to have their DNA sequence analyzed.

“Your DNA sequence, properly encrypted, will soon become a permanent part of your electronic medical record, and will be utilized by health care professionals to make a wide variety of decisions about drug prescriptions, diagnostics and disease prevention,” he says in his 2010 book “The Language of Life: DNA and the Revolution in Personalised Medicine.”

Both DeNA and Yahoo believe that the data they will accumulate will eventually become a valuable resource in medicine and treatment.

“We are sure that the need for providing information to make new medicine will rise. It might be soon, but it might be in the distant future,” said Yahoo’s Inoue.

Yahoo is now looking for people who agree that their DNA information can be used for research purposes.

Both Internet companies acknowledge it is difficult to predict how the new businesses will go, as DNA analysis is still far from common in Japan. Inoue admitted it will be tough to turn a profit by just offering one-time DNA analysis services.

Yet because genomics is evolving fast, “knowledge (about DNA) will be updated and we think that’s where the value is . . . a possible business model will be to charge users for the new information,” he said.

Yahoo sees potential synergy between DNA analysis and its other services. For instance, since it runs an online shopping mall, it could recommend running shoes to people whose DNA analysis suggest they need more exercise.

Fukasawa said he hopes the business will become DeNA’s main pillar, but it’ll take some time. “This is not like other Internet businesses, which typically seek results in the short term. We know that we’ll have to sit tight to see how it goes in three, five or 10 years,” Fukasawa said.

DeNA hasn’t disclosed any numerical targets for the business, but he said he doesn’t want to wait five years to make it profitable.

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