Research Shows Adopting an Orphan Drug Strategy Pays Off


The lifetime revenue potential of orphan drugs far exceeds the financial potential of other medications, according to a recent report conducted by researchers from Thomson Reuters Life Sciences Professional Services and Pfizer.

The lifetime revenue potential of orphan drugs far exceeds the financial potential of other medications, according to a recent report conducted by researchers from Thomson Reuters Life Sciences Professional Services and Pfizer.

With the Orphan Drug Act, Congress sought to encourage research into treatments for rare diseases affecting a small population of patients that may not be economically advantageous because of the relatively low rate of return in comparison with the cost associated with the drug’s development. Since the Act’s passage in 1983, government incentives, shortened trial periods, high rates of regulatory success, and extended exclusivity periods have made the development of orphan drugs more attractive to pharmaceutical companies, according to a report released last month by Thomson Reuters.

As a result of the regulatory changes made to reduce the costs of developing such drugs, and the incentives now being offered to companies willing to direct their attention to the treatment of rare diseases, orphan drugs have the potential to become the industry’s next blockbusters, said the study. Researchers compared the compound annual growth rate (CAGR) of the orphan drug market from 2001 to 2010 with the CAGR for a matched control group of non-orphan drugs and discovered that these rates were 25.8% and 20.1%, respectively.

Thomson Reuters says that these data, combined with the large number of orphan drug approvals, will make targeting rare diseases a fruitful strategy for drug companies. According to the report’s estimates, CAGR for orphan drugs will continue to outpace non-orphan drugs created for larger patient populations in the coming years.

A number of recently approved orphan drugs are already enjoying successful returns, leading them to be grouped in the “blockbuster drug” category, particularly for drugs with multiple indications. Researchers discovered that 15% of the orphan drugs included in the report were approved for additional rare illnesses, and they cited rituximab as a lead example. Rituximab is approved to treat 4 rare conditions—lymphocytic leukemia, B-cell non-Hodgkin lymphomas, Wegener’s granulomatosis, and microscopic polyangiitis—and is also approved to treat rheumatoid arthritis, a non-orphan condition. There are numerous off-label uses of this drug as well, primarily for the treatment of autoimmune disorders. As the world’s second most profitable drug, rituximab is “expected to garner more than $150 billion in revenue over its lifetime, the majority of which is for orphan conditions,” noted the analysis.

Of the top 10 orphan drugs identified in the report, 6 had more than 1 disease indication, with a peak value averaging $34.3 billion in overall sales potential. In addition, of the 86 orphan drugs analyzed in the study, 25 of them (or 29%) generated annual sales exceeding $1 billion. At least 6 of the top 10 revenue generating drugs (both orphan and non-orphan) are specialty medications.

The high prices of orphan medications offset the small patient pool associated with the treatments. Moreover, drugs with orphan indications receive 2 additional years of patent protection. This 7-year exclusivity is renewed with each new indication approval, potentially staving off generic competition for longer periods of time.

"The higher value of companies that have a strong orphan drug strategy reflects the increasing degree of optimism for the sale-and-profit potential of the rare disease market," said Brian Lester, senior analyst and managing director of the life sciences group at the financial services firm Manning & Napier, in a press release. "We expect the orphan disease business model to sustain a competitive edge over the traditional primary care business model in the future."

Related Videos
Pharmacist holding medicine box in pharmacy drugstore. | Image Credit: I Viewfinder -
Pharmacy Drugstore Checkout Cashier Counter | Image Credit: Gorodenkoff -
Medicine tablets on counting tray with counting spatula at pharmacy | Image Credit: sutlafk -
Capsules medicine and white medicine bottles on table | Image Credit: Satawat -
Human cell or Embryonic stem cell microscope background | Image Credit: Anusorn -
Concept of health care, pharmaceutical business, drug prices, pharmacy, medicine and economics | Image Credit: Oleg -
Biosimilar pharmaceutical drug bottle on blue background. | Image Credit: Carl -
Pharmaceutical manufacture background with glass bottles with clear liquid on automatic conveyor line. | Image Credit: wacomka -
Bottle and scattered pills on color background, top view | Image Credit: New Africa -
pharmacy | Image Credit: Diego Cervo -
© 2024 MJH Life Sciences

All rights reserved.