This document discusses the opportunities and challenges of starting a genetic testing company in China. It outlines the company's product which would test for genetic predispositions to various diseases. The process involves collecting a saliva sample, extracting DNA, analyzing it using chips, and interpreting the results. The target market is middle-to-affluent private individuals and insurance companies in China. Challenges include funding, marketing, strategic partnerships, ethical and legal issues.

1. GENETIC
REPORTING Belenova
Durnev
Illarionov
Leont’ev
Rybak

2. PROBLEMS AND OPPORTUNITIES
Insurance companies
*Everybody gets something
*The higher the risk, the
higher the price
Individual customers
*Personalised medicine
*Predisposition to a certain
disease
*Timely changes in lifestyle
and preventive actions

3. PRODUCT
Genetic predisposition for:
Coeliac Disease
Coronary Heart Disease
Lupus
Multiple Sclerosis
Osteoarthritis
Psoriasis
Rheumatoid Arthritis
Bladder Cancer
Breast Cancer
Colorectal Cancer
Gastric Cancer
Lung Cancer
Prostate Cancer
Type 1 Diabetes
Type 2 Diabetes
Obesity
Migraine
Skin Cancer
Alzheimer
Aneurysm
Atrial Fibrillation

4. PROCESS
1 DNA sampling pack with instructions is sent
Saliva sample is taken to a lab
DNA is extracted from the cells in saliva
DNA is placed on genotyping chips
Chips are read by a computer
2
3
4
5

5. INTERPRETATION OF RESULTS
Normal
risks (%)
49
43
35
25
25
25
24
20
17,2
Normal
risks (%)
17
16
11,4
6
6
4,1
2,3
1
0,4
Aneurysm
Prostate cancer
Psoriasis
Alzheimer
Colorectal cancer
Bladder cancer
Gastric cancer
Celiac disease
Breast cancer
Coronary heart disease
Osteoarthritis
Skin cancer
Atrial fibrillation
Obesity
Venous thromboembolism
Type 2 diabetes
Migraine
Lung cancer

6. CUSTOMERS
Private individuals and insurance companies
*Private health insurance expansion in China
*Problem of differentiation and flexibility of insurance packages
*Problem of adverse selection

7. CONSUMERS IN CHINA
120
Number of urban households by income bracket
100%= 190 256 288 338 421
90
60
30
0
2 1 0 1
26
45
26
3 1 2
12
54
17
12
5
29
40
1
13
10
3
4
3
17
33
25
9
8
10 Global
15
32
17
14
6
7
2005 2012E 2015E 2020E 2030E
Affluent
Mass affluent
Upper aspirant
Aspirant
Lower aspirant
Poor
*Number of
middle class and
rich households
stably grows
!
Middle-income
group11

8. INDIVIDUAL CUSTOMERS
Target audience
40s, middle to affluent class
Channels
web-site, medical centres
Additional services
sampling and reporting via mail

9. MEDICINE
IN CHINA
Healthcare reform (2003)
Aimed at innovations
Treatment cost control
Increased industry integration
«Local champions»

10. ALLIANCES
*Problem of benefits
Strategic alliance: Beijing Institute of Genomics
*Lack of funding
*Marketing (off-, online), PR, customer base
=
money FOR economies of scale, facilities, expertise

11. PRICE POLICY
$299
DNA predisposition
diagnostics

12. INITIAL COSTS (EQUIPMENT)
$10 000 $40 000 $4 000
DNA excretion
(vortex, centrifuge,
thermostat)
Real time cycler Camera and
transilluminator
$20 000 $10 000 $88 000
Other laboratory
equipment
(furniture, test
tubes and flasks)
Repairing of the
premises
TOTAL

13. VARIABLE COSTS (per month)
$1 500 $17 000 $8 000
Chemicals Employees: DNA specialist,
biochemist, therapist, 3
assistants, administrator
$14 000
Rent
Marketing and
agents’ commission
(200 clients)
$40 500
TOTAL

14. BREAK-EVEN ANALYSIS
225000
150000
75000
0
-75000
-150000
-225000
-300000
IC+cumulative profit/loss
1 3 5 7 9 11 13 15 17 19 21 23
Months
300
225
150
75
Demand
1 2 3 4 5 6 7 8 9 10 11 12
Months

15. ETHICAL ISSUES
1
Gene patents:
Intellectual property
Conflict of interest
Exploitation
3
Genetic
discrimination
2
Genetic testing:
Eugenics
Reproductive rights
5
Genetic
modification:
Clinical risks
Genetic diversity
4
Genetic privacy:
Informational
Decisional
Physical
Proprietary

16. LEGAL ISSUES
Proper certifications and evaluations
Authorities are mostly concerned with DNA-based
prenatal testing
*China Food and Drug Administration
*National Health and Planning Commission

17. QUESTIONS AND
COMMENTS
ARE WELCOME