Orphan Drugs: From Niche to Mainstream

Larger pipeline and increased support from regulatory authorities are setting up the orphan drug market for long-term success.

Investors and drug developers who still consider orphan drugs as niche have not been paying attention. Orphan drug sales growth significantly outpaces that of the wider pharmaceutical market, and Big Pharma’s fortunes are ever more closely linked to orphan drugs. This once-peripheral market segment has transitioned to the mainstream.

The latest data released in Evaluate’s Orphan Drug Report 2022 indicate that the orphan drug market is growing more than twice as fast as the non-orphan market, with a 2021–2026 CAGR at 12%. Orphans will account for 20% of all prescription drug sales and almost one-third of the global drug pipeline’s value by 2026.

Orphans are forecast to match or outsize several mass-market drugs for chronic, widespread diseases, despite dramatically smaller patient numbers. The clearest example is AbbVie/Johnson & Johnson (J&J)’s chronic lymphocytic leukemia (CLL) drug Imbruvica (ibrutinib), expected to be the biggest orphan drug in 2026 with $13 billion in worldwide sales. This rivals both Bristol Myers Squibb (BMS)/Pfizer’s blood thinner Eliquis (apixaban) and Sanofi’s anti-inflammatory Dupixent (dupilumab), two of the top-selling drugs globally.

Orphans also have strength in numbers: More than half of FDA’s Center for Drug Evaluation and Research (CDER) approvals in 2021 had orphan designations, as did both CAR-T cell therapies approved by the Center for Biologics Evaluation and Research (CBER). In the first three months of 2022, FDA approved seven rare disease drugs, against just four for non-rare conditions (excluding vaccines and new indications for older drugs). New medicines for chronic, widespread, and highly complex conditions such as diabetes, heart disease, or kidney disease are now in the minority.

Big Pharma sees a big opportunity

It is no surprise, therefore, that Big Pharma has rushed to embrace orphan drugs to fuel long-term growth, just as it did with biologics two decades ago. The net present value (NPV) of forecast 2026 sales of the top 10 pipeline orphan drugs is more than $42 billion, and each of the top 10 “blockbuster” orphans in 2026 will be worth between $3 billion and $13 billion (see Figure 1).

The data also show that Big Pharma will sponsor nine of the top 10 orphan drugs by 2026, either directly or through licensing deals, demonstrating not only its investment in this booming sector of the market but its increasing reliance upon it. Almost 40% of J&J’s pharmaceutical sales will come from orphans by 2026, thanks largely to blood cancer drugs Imbruvica and Darzalex, which are expected to bring in over $23 billion in combined sales (see Figure 2).

Orphan drugs will also comprise over one-fifth of sales at seven other Big Pharma companies by 2026. J&J will have displaced BMS from the 2024 top orphan-seller spot by 2026, as patents expire this year on BMS’s blockbuster orphan Revlimid, which came from Celgene. AstraZeneca will take silver (thanks to Alexion), while oncology-focused Roche and its Swiss neighbor Novartis maintain third and fourth. AstraZeneca’s 22.6% forecast CAGR between 2021–2026 (powered by Alexion) is more than double the next best, J&J’s 11%. BMS’s expected -12.5% CAGR over the period is due to declining sales of Revlimid, which generated $12.8 billion in 2021.

Driving force

What will drive orphans’ continued rise over the next four years? The explosion in new tools and drug discovery approaches, from gene editing to AI-powered screening and drug design, will undoubtedly play a significant role. Most new drug modalities first make their mark in rare diseases, as these conditions are often genetically defined and underserved with a poor prognosis. As a result, rare diseases offer a fast-tracked opportunity to demonstrate proof of concept for novel technologies.

Hence the top 20 orphan R&D products include a stem cell treatment, several cell- and gene- therapies, a CRISPR-Cas9 gene-edited therapy, RNAi therapeutics, targeted and bispecific antibodies, and even an oral suspension of gold nanocrystals, Clene’s CNM-Au8 for amyotrophic lateral sclerosis.

CAR-T and gene-edited therapies may still be in their infancy, but they are expected to accumulate further indications and value as underlying technologies allow for more efficient, faster administration. They may not reach the heights of Merck’s $17.2 billion cancer behemoth Keytruda (pembrolizumab), first approved as an orphan eight years ago (and which, with over two dozen approved indications, has outgrown its orphan status). However, with six-figure price tags, several CAR-T cell therapies are expected to reach blockbuster status.

J&J’s CAR-T cell therapy Carvykti (ciltacabtagene autoleucel/cilta-cel) is a case in point. The sixth CAR-T cell therapy to reach the US market and the second that targets B-cell maturation antigen (BCMA), it was—as of February 2022—the most valuable pipeline orphan, with forecast 2026 sales of $1.7 billion and an NPV of more than $10 billion. Vertex/CRISPR Therapeutics’ CRISPR-Cas9 gene-edited therapy CTX001 is also a pipeline lead, with forecast 2026 sales of $1.3 billion.

Orphans’ strong growth, and their attractiveness as a testing ground for new R&D tools and modalities, is leading to crowding in some corners of the market. Oncology continues to be a dominant therapy area, accounting for six of the top 10 pipeline candidates. Three of those—Imbruvica, Calquence, and Venclexta—address the same blood cancer subtype, CLL.

Greater competition in some corners of the orphan market is driving the kind of line extension behavior seen in non-orphan spaces, such as new formulations and more convenient dosing. Yet an estimated 7,000 rare diseases remain underserved. This explains growing criticism of orphan drug legislation on both sides of the Atlantic, as regulators, policymakers, and payers begin to question whether current rules are fit for purpose. The US Orphan Drug Act came into force nearly 40 years ago, and EU legislation was adopted in 2000.

Orphan drugs will continue their upward trajectory. As scientists unpick disease mechanisms in greater detail, many conditions, including widespread ones, are being sliced into narrower subcategories. Precision medicines are gaining ground. More and more medicines are likely to meet the criteria for a rare condition.

Oncology orphan drug sales will grow 70% between 2021–2026 in absolute terms, while sales of orphans treating musculoskeletal disorders, infectious diseases, and gastrointestinal conditions will more than double over the same period. Immunology and dermatology products will also see fourfold and tenfold growth, respectively.

The orphan drug R&D pipeline is full of new modalities and new therapies are on their way. This growth is good news for patients and will further encourage developers striving to bring new assets to market. Meanwhile, regulators such as FDA continue to provide a supportive environment, calling for greater data collection and sharing, and more efforts to identify patient-relevant endpoints. For those investing or acquiring in the orphan drug market, there are clear opportunities for a positive return on investment.

Melanie Senior, author, Evaluate’s Orphan Drug Report 2022