Analysts show why orphan drug development is going gangbusters

Small patient populations represent a huge market opportunity. Orphan drugs are one of the pharma industry's hottest growth markets, and new figures from Thomson Reuters underscores that the blistering rise in revenue will drive the development of the next generation of experimental products. 

Over the past decade, the growth rate for orphan drug revenue has been 25.8%, significantly steeper than the 20.1% pace set by a control group of non-orphan therapies. And researchers for Thomson Reuters project that the orphans--a market now worth more than $50 billion--can continue to outpace the rest of the field, protected by special terms on exclusivity, strong subsidies for new research, shorter and less expensive timelines for development and waived regulatory fees.

Oncology represents the biggest disease category for new orphan drugs. About 40% of today's orphans are used to treat cancer, a reflection of the growing understanding of the way that genetic aberrations can be used to identify specific, small patient populations.

The economics of orphans are hard to ignore. About a third of the 86 orphan treatments studied by Thomson Reuters' team qualified as blockbusters. "The number of blockbusters approved each year remained constant between 2000 and 2010, suggesting that the blockbuster model is not dead, but remains an important part of pharmaceutical R&D, supplemented by emerging areas such as rare disease research." And investors are clearly clued in, which helps explain why orphan drug companies like Biomarin ($BMRN) have higher relative values than others in the industry.

"Ultimately, the analysis validates the significance of targeting rare diseases in the global pharmaceutical market," notes the analysis. "This attention will not only potentially affect the lives of millions worldwide who suffer from rare diseases, it will also propel the evolution of precision medicine."

Check out the list of the top 10 orphan drugs now on the market.

- click here to download the report from Thomson Reuters