Orphan drugs, which treat diseases affecting fewer than 200,000 people, represent a lucrative market for pharmaceutical companies, driven by high unmet needs and advantageous pricing and regulatory frameworks. The orphan drug sector has shown a higher growth rate compared to non-orphan drugs, and significant percentages of these drugs achieve substantial annual sales. While 80% of rare diseases are genetic and 95% lack approved treatments, the market for orphan drugs is projected to reach $50 billion globally, underscoring their importance in addressing rare medical conditions.

1. ORPHAN
DRUG
101
Over 30 years after the Orphan Drug Act was passed,
orphan drugs continue to be a lucrative market for
pharma companies. Although orphan diseases affect
small populations, these treatments address a high
unmet need and also benefit from commercially
attractive pricing structures and additional
regulatory benefits.
ORPHAN DISEASES ARE DISEASES THAT
AFFECT FEWER THAN 200,000 PEOPLE
RARE DISEASE CLASSIFICATION VARIES
BY COUNTRY
ADDITIONAL FDA REQUIREMENTS FOR
ORPHAN DRUG APPROVAL
ORPHAN DRUG DEVELOPMENT PROVIDES PHARMA COMPANIES WITH A VARIETY OF
BENEFITS, BOTH R&D AND COMMERCIAL
GROWTH RATE OF ORPHAN VS. NON-ORPHAN DRUGS (2001-10)
2001
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
SALES($M)
2002 2003 2004 2005 2006 2007 2008 2009 2010
ORPHAN DRUGS (CAGR: 25.8%)
NON-ORPHAN DRUGS (CAGR: 20.1%)
50%80%
of rare diseases
are genetic
95%
have no approved
treatment
of those affected
are children
That’s about one in ten
.
Orphan diseases affect
30 million Americans
7,000 6% 1983
Estimated
number of rare
diseases
Year the US
passed the
Orphan Drug Act
Spending on orphan
drugs out of total
pharmaceutical sales
United States: fewer than 200,000
people in the US or less than 5 per
10,000 in individual communities
European Union: fewer than 5 in
10,000 citizens
Japan: fewer than 50,000 prevalent
cases (0.4% of population)
Australia: does not define a rare
disease in terms of the number of
patients, but the drug must not be
intended for use in more than 2,000
patients per year
Canada: has no official “orphan
disease” status
Taiwan: prevalent in 1 out of 10,000
people
Drugs and biologics only
Intended for the safe and effective
treatment, diagnosis, or prevention of rare
diseases/disorders
Rare diseases/disorders must affect fewer
than 200,000 people in the U.S., or if the
disease affects more than 200,000 persons,
the treatment drug must not be expected to
recover the costs of development and
marketing.
Tax credits
R&D grants
Waived FDA fees
Shorter development
Greater regulatory success
Favorable reimbursement
Fewer hurdles to approval
Longer exclusivity
Lower marketing costs
Faster uptake
Premium pricing
R&D INCENTIVES COMMERCIAL INCENTIVES
R&D
ISRreports.com | info@ISRreports.com | @ISRreports Sources: ISR Research, Forbes, NCBI, FDA,
Thomson Reuters, DrugDiscovery.com,
$50 BILLION
Worth of the global
orphan drug market
29%
of orphan drugs have
annual sales greater
than $1 Billion
15%
of orphan drugs have
indications for additional
rare diseases