In 2020, Bayer bought New York-based Care/of, a rising star in the space, for $225 million. The acquisition helped solidify the industry into one that was well-defined and well-funded within the health market. Just one year later, there were over 425 personalized nutrition companies including standouts at the time such as Persona, which was purchased by Nestlé for an undisclosed amount in 2019. Dutch life sciences firm DSM invested $100 million to launch AI-focused Hologram Sciences in 2021.
Care/of was initially successful because it asked consumers to fill out an 5-minute online questionnaire—a quick, straight-forward process that would unlock which vitamin regimen users should take. Vitamin packs were delivered by mail. Experts said the company’s popularity rose during the Covid-19 pandemic as consumers prioritized health and purchased more supplements and wellness products.
The honeymoon did not last. Bayer experienced a series of financial difficulties, including those tied to the outcomes of Monsanto lawsuits. The company also restructured earlier this year. One source told NutraIngredients-USA that Care/of was only partly a casualty of the parent company’s greater financial strains, although growth is forecasted in the Bayer Consumer Health branch. Experts suggest that Care/of made a fatal business mistake by entering the retail space without a clear vision of how to compete with other well-established brick and mortar supplement players.
Dr. Arielle Levitan, MD, co-founder of Vous Vitamin, which offers all-in-one vitamin blends based on a lifestyle and health questionnaire, said Care/of was a strong competitor for many years and played a critical role in the formation of the personalized vitamin sector.
“They were well-funded and used those funds to raise awareness around the concept of a ‘personalized vitamin routine’ in the mind of many consumers,” she added. “They have shortened the ramp to educate the consumer on the difference between personalized options and mass market options. Now it is incumbent on remaining players to deliver value to those same consumers.”
Although the global personalized nutrition market is expected to grow to $23 billion by 2027 (and experts believe wearables make up a lion’s share of that number), Noah Voreades, founder and managing director of GenBiome Consulting, said he believes that since 2019, consumers have not allocated a significant part of their budgets on personalized supplement solutions.
“Bayer’s sunsetting of Care/of signals consumer health companies are taking a massive re-evaluation step back,” he said.
There may be no greater unease among investors than with 23andMe, for example. The personalized genomics and biotechnology company—which has ongoing litigation from a data breach and is engaging in expensive drug development—saw its stock close around .31 cents on Thursday. The company’s 52-week stock high was $1.25, down from its highest point of $17.65 on February 4, 2021.
Voreades said that venture capital firms have responded lately to the industry downturn by being highly selective in allocating capital to startups. Typically, they need to see at minimum a 3-5 times return on investment over no more than a seven year span.
“On top of it, these [personalized nutrition] companies are competing on a multi-front battle,” he added.
The competition for market share has heated up with the advent of technological advances. Companies are less likely to dole out supplements based solely on questionnaires. Instead, they have incorporated a range of biological tests and inputs from wearables to create a more ideal profile of users and their health needs.
Despite a climate of wary investors, at-home lab testing company Everlywell had reached a valuation of nearly $3.61 billion by 2023, according to UpMarket. The company hit “unicorn status,” Voreades said, when it paired its lab tests with the supplement solutions it sells.
Also receiving capital was Function Health, which recently raised $53 million in Series A funding and is backed by celebrities such as Matt Damon and Colin Kaepernick. It uses biomarker testing and offers more than 100 lab tests in areas such as the brain, hormones and fertility. It costs $499 per year, or $42 per month.
What does personalization mean?
The concept of personalized nutrition dates to 1950 when American biochemist Roger J. Williams described genetotrophic disease as “one which occurs if a diet fails to provide sufficient supply of one or more nutrients required at high levels because of the characteristic genetic pattern of the individual concerned.”
By 2003, the concept of personalized nutrition had evolved, framed by the idea of assisting the individual to develop dietary behavior changes that could achieve lasting health benefits.
“Although personalization was brewing much longer, what really took it over the top was Theranos, key learnings of the microbiome, hair and saliva testing for hormones, DNA testing and understanding how minerals metabolize,” said Kenn Israel, founder and manager of Innovation Nutrition Consulting.
Theranos was founded in 2003 as a private healthcare company whose creator claimed to have developed a blood-testing technology that could perform hundreds of tests using a finger prick’s worth of blood. The company’s claims were debunked by 2015, just after Theranos was valued at $10 billion.
Theranos’ deception did not diminish the continued growth of personalized nutrition companies, however. Many continue to gather and test biological materials such as stool, blood and saliva samples for DNA tests to derive more precise interpretations.
Ali Mostashari is CEO of LifeNome, a B2B company that provides genomics AI-based personalization for food, fitness, beauty, insurance and preventative health enterprises.
“Precision health is basically when you have actual data,” he said. “We do take into consideration what people tell us in questionnaires, but we also look at tens of thousands of clinical studies that correlate genomics or methylation or microbiome to particular needs that people may not be able to tell you about.”
For example, a pregnant woman needs folate, but she may be unaware that she has a predisposition for folate deficiency. This is not something a questionnaire can easily pick up, as she would need a blood test to confirm.
“I would say precision health is a deeper level of personalization,” Mostashari added.
Filling a need?
It was several years ago when Dr. Romy Block, co-founder of Vous Vitamin, noticed patients were increasingly approaching her, confused about what vitamins or supplements they should take.
“Patients’ needs were not being met adequately with off-the-shelf products. Their symptoms were not changing. Their health was not improving,” she said. “In some cases, the products were creating unwanted problems.”
For companies trying to address these concerns, they often would provide 10 or more daily pills and powder at a cost of $100 a month.
“Based on our clinical experience and years in medical practice, we seriously question consumers’ ability to stick with these personalized routines as nobody likes to swallow a handful of pills of different shapes and sizes,” Dr. Block added.
She also critiques genetic and blood tests, saying they do not offer sufficient value to consumers based on “our interpretation of the current state of the science.” Lifestyle decisions such as diet will drive vitamin levels over time to diverge from the snapshot blood panels show.
She said that nutrigenetics, the study of how genes and nutrients interact, is such a nascent field that the mere presence of a gene does not mean that it is an active gene in an individual’s body.
Israel agrees that the science has room to grow.
“The science isn’t there yet and it needs to get there,” he said. “How many people do we see wearing an Apple Watch? How many people have taken a DNA test? If you could couple that with a blood test, now we’re getting somewhere. One or a couple of these companies are going to clearly demonstrate that the value that they’re delivering is higher than the $150-a-month price tag they are charging.”
Vous Vitamin said it has reached a cost that meets consumers’ budgets (about $30 a month for a subscription) and has made vitamin consumption easier with its blends. Brad Helfand, the company’s CEO, said personalization should be built into the product itself rather than offering a packaging innovation such as a pill pack.
“You can go out to Costco or Target and repeat [the Care/of model],” Helfand said. “What we’re doing is taking the data and saying, ‘how can we think differently about the design of our product that gets it much more targeted to a mass market offering?’”
Voreades agreed Care/of did not provide customers with clear superior value when compared to buying separate products at retail outlets. The consultant, who has participated in at least 25 personalized supplement regimens, noted that California-based Elo Health initially gave consumers pill packs before changing its solution to a more consumer-friendly format of 3D printed seven-layered gummies to deliver supplements.
“I had very poor compliance with any pill pack-based solution because every morning I looked at that pack and I was like, ‘I’ve got to swallow 10 of these things?’” he said.
Artificial intelligence
Whether it is taking multiple pills or submitting a stool sample or a saliva kit, companies recognize that personalized nutrition may be considered physically invasive for some people. What if there was a way to capture biological data with minimal inputs but could still accurately measure the nutritional needs of a person?
Mostashari said AI is changing the personalized nutrition space so that companies would no longer need to issue multiple tests to determine supplement regimens or disease risk or how to modulate a microbiome. AI tools could gather information from massive data sets, such as the UK Biobank. The large-scale, long-term biomedical database and research resource supported by the British government includes data from 500,000 study participants.
Instead of completing a 30-point questionnaire, a person might give a few data points to a company that then compares the individual’s responses to databases with population health information. AI essentially matches a person to an existing subgroup and makes personal recommendations and predictions from that data. This process will ultimately be less expensive for consumers, Mostashari said.
“So that’s what makes AI very powerful,” he added. “People don’t want to provide data over time, and they won’t have to provide data. We will have little to no input from them to be able to personalize things.”
Mostashari also believes this data should be held in a nonprofit consortium.
“Interesting enough, around 67% of people are okay with their data being used for research, if that research is not just for the profit of a single company and can contribute to the wider academic knowledge,” he said. “There is this idea within a market economy that you can profit from everything, and I’m not comfortable with that unless someone benefits from it.”
The human touch
The idea of democratizing personalized nutrition, or at least making it more accessible, is backed by research. Although companies’ subscription costs and product prices may be prohibitive for some Americans, Joshua Anthony, founder and CEO at consultancy Nlumn, said there is interest in personalized nutrition among most consumers.
Nlumn data show 57% of the 3,000 U.S. consumers it surveyed reported that they were interested in personalized nutrition and other aspects of personalized health and wellness, including supplementation, exercise and well-being practices. The greatest interest occurred in households making $50,000-$99,000 a year, although 46% of individuals said subscription services were too expensive. Some 63% of consumers seek a high level of support from providers, and, according to consultants interviewed for this story, this includes counseling from registered dietitians.
“People seek assistance in terms of helping them with their lifestyle decisions,” Anthony said. “I think that it is so important that personalized nutrition comes with access and support so that we can reach the people that need it.”