Industry's Rare Disease Moves Pay Off

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Includes: ALXN, BIIB, NONOF, NVO, RHHBY, SRPT
by: EP Vantage

The pharmaceutical industry’s growing interest in orphan disease shows no sign of diminishing, and for good reason. The increased R&D investment in these indications in recent years has translated into a growing share of overall pharmaceutical sales, a new EvaluatePharma report finds.

The drivers of this change include the favourable regulatory treatment of orphans, as well as market exclusivity and pricing advantages that make such drugs much more profitable than non-orphans. It is notable that the top 25 non-oncology orphan drugs in 2022 are expected to show a compounded growth of 18% over the next six years, almost three times the wider market average (see table below).

EvaluatePharma’s report, issued today to coincide with Rare Disease Day, suggests that orphan drugs collectively generated sales of $114bn in 2016, accounting for 16.4% of the global non-generic pharmaceutical market. This rises to $209bn by 2022, at which point these products will represent 21.4% of the overall market, a proportion that will have doubled in just over a decade.

If these sellside consensus forecasts are achieved orphan drugs will have shown a sales growth rate averaging 11.1% a year over the next six years – around double that of non-orphans.

The report uses a definition of orphans that includes drugs first approved in an orphan indication or, where approved in more than one indication, that have more than 25% of their sales in orphan uses. Furthermore, cancer almost always meets the orphan criteria; oncology has different commercial characteristics from orphans in the more classical sense, though it is attractive to pharma for many of the same reasons.

Narrowed down

A narrowed definition, capturing only drugs that address chronic treatments for rare, life-threatening conditions outside oncology suggests that these top 25 orphans will have collective sales of $37.4bn in 2022, or around 3.8% of global pharmaceutical turnover.

Of course this omits blockbusters that have a number of approved uses, most of which are not orphan. The narrower proportion should be watched carefully, as it gives a good indication of the overall sum spent on the very high-priced treatments for conditions such as cystic fibrosis and rare lysosomal diseases.

Top 25 orphan* drugs in 2022

Global sales ($m)

Product

Company

Indication

2016

2022e

Soliris

Alexion

PNH, aHUS, (gMG)

2,843

5,139

Orkambi

Vertex

Cystic fibrosis

980

3,634

Ofev

Boehringer Ingelheim

Idiopathic pulmonary fibrosis

763

1,827

Advate

Shire

Haemophilila A

1,258

1,740

HyQvia

Shire

Primary immune deffiociency

258

1,714

Uptravi

Actelion (J&J)

Pulmonary arterial hypertension

249

1,679

Spinraza

Biogen

Spinal muscular atrophy

5

1,648

Sandostatin LAR Depot

Novartis

Acromegaly

1,646

1,624

Opsumit

Actelion (J&J)

PAH

843

1,546

Gammagard

Shire

Primary immune deficiency

882

1,540

Xyrem

Jazz Pharmaceuticals

Narcolepsy

1,110

1,476

Emicizumab

Roche

Haemophilia

0

1,370

Samsca

Otsuka

Hyponatraemia

451

1,167

Strensiq

Alexion

Hyperphosphatasia

210

1,114

Lanadelumab

Shire

Hereditary angioedema

0

1,094

Fabrazyme

Sanofi

Fabry disease

746

1,071

Myozyme

Sanofi

Pompe disease

802

1,050

Cerezyme

Sanofi

Gaucher disease

828

979

SAGE-547

Sage Therapeutics

Super refractory status epilepticus/postpartum depression

0

973

LentiGlobin

Bluebird Bio

Heamophilia

0

969

Epidiolex

GW Pharma

Dravet/Lennox Gastaut syndrome

0

852

Kalydeco

Vertex

Cystic fibrosis

703

849

Pulmozyme

Roche

Cystic fibrosis

695

792

Vimizim

BioMarin

MPS Type IV A (Morquio A syndrome)

354

778

Prolastin-C

Grifols

Emphysema

747

747

Note: *chronic treatments for rare, life-threatening conditions outside oncology. Source:EvaluatePharma.

There has been little or no pricing pressure in these areas so far, at least while they remain a single-digit percentage of overall pharmaceutical sales. But there is a concern that at some point the market will face pushback from payers, presumably when an untenable proportion of the budget is spent on a small proportion of patients.

Alexion’s (NASDAQ:ALXN) famous ultra-orphan Soliris remains the lead product in this category. Soliris, with sales of $3.7bn, ranks 27th overall in terms of all pharmaceutical products sales. But with the sellside consensus anticipating approval in generalized myasthenia gravis this is expected to rise to $5.1bn in 2022, by which point EvaluatePharma data suggest that it will have become the ninth-largest selling drug overall.

Competitive changes

Comparison with a similar analysis carried out last year highlights a surprising degree of movement between the top orphans (Industry work on rare diseases continues to bear fruit, March 3, 2016). For example, Roche’s (OTCQX:RHHBY) Esbriet and Novo Nordisk’s (OTCPK:NONOF) (NOVO) NovoSeven, which both had prominent places in 2020 based on last year’s consensus data, now seem likely to disappear without trace in 2022, probably as a result of competitive changes in their indications.

And in recent months the orphan space has seen the launch of Biogen’s (NASDAQ:BIIB) Spinraza for spinal muscular atrophy and Sarepta’s (NASDAQ:SRPT) Exondys 51 for Duchenne muscular dystrophy. The former is expected to join the top 10 orphans by 2020, while the latter just makes the top 30. In a first for this space, however, both have seen US payers move to limit their use (Payers threaten a hard-knock life for orphan projects, January 25, 2017).

Orphans, however they are defined, remain one of the brightest spots of pharmaceutical development, and the legislation framing them is widely claimed to have been a great success in public policy terms. However, there is a risk that before long orphans could face the same sort of pricing pressure as is common in non-orphan indications.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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