For a long time, pharma companies have looked to large disease populations as the biggest potential revenue streams. But those days are long gone. That perception has shifted, especially with the prescription drug market stagnating in the U.S. and Europe. Orphan drugs--pharmaceutical treatments for rare diseases or disorders--have proven themselves as viable moneymakers, and the industry has taken note.
As many drugmakers have figured out, a small patient group can prove extraordinarily lucrative--at the right price. Orphan drugs--sometimes a godsend to those suffering from life-threatening conditions that previously had no treatments--are some of the highest-priced medicines out there. And while it's well-documented that these drugs can bring in serious revenue, EvaluatePharma's 2013 Orphan Drug Report reveals that orphan drugs are now showing a greater return on investment than products aimed at larger patient pools.
It's not hard to see the allure of orphan-drug development. Companies finding solutions for rare diseases face less competition, if any at all, from branded offerings and generic rivals. Additionally, the orphan drug designation offers a fast-tracked regulatory review process and lower-cost late-stage development. And with the worldwide orphan drug market set to reach $127 billion by 2018, accounting for nearly 16% of total prescription drug sales, it's becoming the next arena for some of pharma's biggest breakthroughs and fiercest patent wars.
The list of top projected 2018 sellers includes treatments ranging from Roche's ($RHHBY) Rituxan, a megablockbuster being chased by biosimilars producers who have caught on to the market's appeal, to therapies like Soliris from Alexion ($ALXN) and Kalydeco from Vertex ($VRTX), whose makers are trying to expand the small patient populations that keep them afloat.