Renewed Realisation of Orphan Drug Market Potential

Pharma IQ

Orphan drugs were previously considered not worthwhile for development by pharmaceutical companies due to their small patient base, which was translated by some to mean small revenues.

Orphan buzz in biotech

However, if this was once the case, it is now changing. Orphan drugs are creating much buzz, within the biotech sector in particular, thanks to a renewed realisation of their market potential.

As Dr. Kimberly Lee, a senior analyst for Global Hunter Securities, told The Wall Street Transcript recently: "I think the orphan space will be hot, given that there is no pricing pressure for  these drugs because of the unmet medical need for the drugs that they're targeting."

Some of the largest names in the pharmaceutical industry are now looking to increase their efforts in the orphan drugs sector. According to Research and Markets: Personalized Medicine & Orphan Drugs Review and Outlook 2010: "Industry experts estimate that orphan drugs bring in about $40 billion in annual sales. With drug companies facing devastating patent expirations and new drug opportunities drying up in existing markets, orphan drug development has become an enticing solution."

However, Angus Russell, chief executive of Shire, has a word of warning for big pharma companies looking to enter the orphan drugs market.

He told the Wall Street Journal: "For these big companies entering this arena, there's also a big cultural challenge and it will be interesting to watch in that these markets are not scalable ... these can't be marketed in large volumes globally to very large patient populations like blockbuster drugs."

Industry growth

Financial results from some of the largest orphan drug developers seem to back up this interest. Shire recently announced an increase in product sales and total revenues in excess of 30 percent in the third quarter of 2010.

Particular successes include a 91 percent increase in sales of REPLAGA to Fabry disease patients, which means Shire now boasts a 60 percent market share in the category. In just seven months, the company's treatment for Gaucher disease has achieved a 16 percent market share.

Russell added: "We've made progress in several significant programs in our research and development pipeline, including investigative uses of Vyvanse for adjunctive therapy in patients with Major Depressive Disorder."

 Advantages of orphan drug designation

Both the European Medicines Agency and the United States Food and Drug Administration provide a number of incentives for companies developing orphan drugs, including assistance with trials and significant periods of market exclusivity.

In the United States, a product can be designated as orphan if the condition it treats affects 200,000 people or less, while in Europe it is five people in every 10,000 or fewer.

Since the U.S. Orphan Drug Act was passed by Congress more than 2,100 compounds have been submitted for orphan status in the United States and more than 350 have received designation.

The incentives appear to be working and the pharmaceutical industry's appetite for developing therapies for rare diseases seems to be increasing. Both GlaxoSmitKline and Pfizer Inc. opened research units this year dedicated to developing biologics for rare diseases. 

According to the Research and Market: "Despite the small patient pools they are being developed for, the most successful orphan drugs have more than recouped R&D investment for their developers. Merck's brain cancer drug Temodar was originally approved in 1998 for treating the orphan indication anaplastic astrocytoma, has since been approved for other brain cancer forms, and generated sales of more than $1 billion in 2009." 

Tufts CSDD associate director Christopher-Paul Milne, commented that the Orphan Drug Act in the United States should be considered a success, "without question".

Asia - the new frontier for oprhan drugs

Due to the size of its popoulation Asia is set to become an area of great interest for companies developing orphan drugs. Mary Dunkle Vice President of Communications, National Organization for Rare Disorders, said in Pharma Focus Asia: "Asia has emerged in recent years as the newest frontier in the development of treatments for diseases classified as rare. Several Asian nations either have enacted, or are considering, orphan drug legislation." report Orphan Drugs in Asia-Pacific: From Designation to Pricing, Funding & Market Access, also highlighted the potential for orphan drugs in the Asia-Pacific region: "Rare diseases are collectively not that rare, indeed 6-10 percent of people will suffer from one at some point in life. Asia-Pacific contains nearly two-thirds of the world’s population, and should offer great potential to companies developing orphan drugs. The region’s population is 4 billion, nearly two-thirds of the global total, so even the rarest disease will have many patients seeking treatment.."

"Today, many companies, both large and small, are finding a profitable niche in orphan product development. And, for the patient community, this translates to treatments for diseases that previously had none," said Dunkle.