Orphan drugs have dominated new drug approvals over the past several years, but have they been met with commercial success? DCAT Value Chain Insights (VCI) takes an inside look..

In 2015, 47% of new molecular entities approved by the US Food and Drug Administration’s (FDA) Center for Research and Evaluation (CDER) were orphan drugs and in 2014, 41% were, making these years the strongest years for new orphan drugs. But does a niche therapeutic focus translate into market success?

A look at the numbers
Although a niche part of the overall pharmaceutical market, the market for orphan drugs is projected to grow at strong rate over the near term. The global orphan drug market, which totaled $117.3 billion in 2013, is projected to reach $123 billion and $191 billion in 2014 and 2019, respectively, reflecting a compound annual growth rate (CAGR) of 9.2% from 2014-2019, according to BCC Research LLC, a Wellesley, Massachusetts-based market research firm. BCC estimates that the biological orphan drug market should total $126.1 billion in 2019, up from a projected $83 billion in 2014, while the non-biological orphan drug market should reach $64.7 billion in 2019, up from a projected $39.9 billion in 2019. The biological and non-biological markets are anticipated to achieve five-year compound annual growth rates (CAGRs) of 8.7% and 10.1%, respectively, according to BCC.

Successful legislation has contributed mainly to the growth of the orphan drug market, which is dominated by the US and Europe. In 2015, 47% of new molecular entities (NMEs) approved by the FDA’s CDER were orphan drugs, and in 2014, 41% were, making these years the strongest years for new orphan drugs. In 2015, the European Medicines Agency (EMA) issued a record number of orphan-drug approvals, with 18 of a total of 39 new recommended medicines being orphan-designated (46%). This compares to 17 orphan-designated medicines in 2014, and also marks a increase from the 11 recommended orphan-designated products in 2013.

Both the US and the European Union (EU) provide incentives, including market exclusivity, for developing and getting approval for a new orphan drug. In the US, the Orphan Drug Designation program under the FDA provides orphan status to drugs and biologics that are defined as those intended for the safe and effective treatment, diagnosis or prevention of rare diseases/disorders that affect fewer than 200,000 people in the US or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment drug.

In the EU, the European Medicines Agency’s Committee for Orphan Medicinal Products evaluated applications for orphan drug status. Three requirements must be met: (1) the drug must be intended for the treatment, prevention, or diagnosis of a disease that is life-threatening or chronically debilitating; (2) the prevalence of the condition in the EU must not be more than 5 in 10,000 or it must be unlikely that marketing of the medicine would generate sufficient returns to justify the investment needed for its development; and (3) no satisfactory method of diagnosis, prevention or treatment of the condition concerned can be authorized, or, if such a method exists, the medicine must be of significant benefit to those affected by the condition.

An analysis by Thomson Reuters pointed to a CAGR of the orphan drug market between 2001 and 2010 of 25.8%, compared to only 20.1% for a matched control group of non-orphan drugs. The report noted that that despite the smaller patient pool for rare disease R&D, the economics of orphan drug development and potential for commercialization are attractive when compared to their nonorphan counterparts. It points to economic drivers such as tax credits, grants, waived FDA fees, reduced timelines for clinical development and higher probability of regulatory approval, coupled with commercial drivers such as premium pricing, faster uptake, lower marketing costs and longer market exclusivity as favorable indicators for orphan drug development.

Analysts also point to the potential of the orphan drug market in emerging markets. “Pharmaceutical giants and biotech firms are trying to increase their global presence through strategic alliances, collaborative developments and marketing agreements. This strategy proved sound with the emergence of markets in India and New Zealand, for example,” says BCC research analyst Shalini S. Dewan, in a company release in commenting on the BCC report. “Increasing global awareness of orphan diseases and associated treatment options, along with the greater availability of approved orphan drugs in emerging markets through strategic alliances, will continue to be major boosts to emerging market growth.”

Recent drug approvals
In 2015, FDA’s CDER approved 21 NME orphan drugs, representing 47% of the 45 NMEs approved.Table I outlines the orphan dIrugs approved as NMEs in 2015. In 2014, 41% of the NMEs approved were for rare diseases, accounting for 17 of the 41 NMEs approved in 2014. In 2013, 33% of the NMEs approved (9 of 27) were orphan drugs.

Finding the niche
So what is behind the uptick in orphan drug approvals and what does it mean from a commercial basis? The passage of the Orphan Drug Act of 1983 in the United States provided a mechanism to facilitate the development and commercialization of orphan drugs. FDA’s Orphan Drug Designation program provides orphan status to drugs and biologics that are defined as those intended for the safe and effective treatment, diagnosis, or prevention of rare diseases/disorders that affect fewer than 200,000 people in the US, or that affect more than 200,000 persons but are not expected to recover the costs of developing and marketing a treatment drug. Between 1983 and 2013, the FDA approved more than 450 drugs and biologic products for rare diseases. In the decade prior to the Orphan Drug Act, fewer than 10 treatments had been developed by industry for rare diseases, according to the FDA.

Perhaps the best known example of a company developing and commercializing orphan drugs is Genzyme, now part of Sanofi. Its first such product, Cerezyme (imiglucerase for injection), which is indicated for long-term enzyme replacement therapy for pediatric and adult patients with a confirmed diagnosis of Type 1 Gaucher disease, was launched in 1994 and other products followed. Fabrazyme (ceramide trihexosidase/alpha-galactosidase) to treat Fabry disease was launched in Europe in 2001 and soon expanded to the US and other regions. Aldurazyme (laronidase) used to treat patients with the Hurler and Hurler-Scheie forms of mucopolysaccharidosis I (MPS I), came to market in 2003. In 2006, Myozyme (recombinant human acid alpha-glucosidase) was approved in the US to treat infantile Pompe disease and all Pompe patients in Europe and other regions. And Lumizyme (recombinant human acid alpha-glucosidase) was approved in the US in 2009 specifically to treat late-onset Pompe disease.

A strong recent example of a company positioning itself in rare diseases is Shire, which was in part the strategic rationale behind its $32 billion acquisition of Baxalta, which was completed in June 2016. The combined portfolio will have an expanded range of therapeutic areas with more than 60 programs in development, including over 50 that will address rare diseases and newly approved Baxalta products. Shire anticipates more than 30 recent and planned product launches from the combined pipeline, contributing approximately $5 billion in annual revenues by 2020. Baxalta was spun off from Baxter as a stand-alone biopharmaceutical company in 2015.