Who Will Dominate the $242 Billion Orphan Drug Market?

Author: Huizhong Medical

In recent years, the orphan drug market has gained significant momentum, with its market size projected to reach $242 billion in 2024. Domestic pharmaceutical companies have recognized the value of the orphan drug market and are leveraging it as a stepping stone to enter international markets.

I. Rising Momentum in the Global Orphan Drug Market

Orphan drugs are medicines used for the prevention, diagnosis, and treatment of rare diseases. Currently, there are approximately 5,000 to 8,000 rare diseases worldwide, affecting a population of 350 million people, with nearly 20 million rare disease patients in China. In 2018, the global market size for rare diseases was $131 billion. According to forecasts by the pharmaceutical market research firm Evaluate Pharma, the market size is expected to reach $242 billion by 2024, accounting for one-fifth of global prescription drug sales.

In recent years, the orphan drug market has heated up, with innovative “unicorn” companies holding global exclusivity for their drugs being particularly favored by capital. In May 2018, Novartis announced an $8.7 billion acquisition of the gene therapy company AveXis, securing an orphan drug for spinal muscular atrophy; in March 2019, Biogen spent $800 million to acquire the gene therapy firm Nightstar Therapeutics to gain a portfolio of investigational orphan drugs in ophthalmology; and in May of the same year, Pfizer acquired the rare-disease clinical-stage company Therachon for $810 million, aiming to develop innovative therapies for achondroplasia... International pharmaceutical giants are increasingly focusing their efforts on the orphan drug sector.

Top 3 Orphan Drug Companies by Revenue in 2018

According to the "2019 Orphan Drug Report" released by Evaluate Pharma, the top three companies in terms of orphan drug sales in 2018 were Celgene ($12.6 billion), Roche ($10.3 billion), and Novartis ($10.2 billion). It is predicted that by 2024, these three companies will collectively generate nearly $40 billion in revenue, accounting for 17% of the total orphan drug market.

Top 20 Orphan Drug Companies Worldwide in 2024

#1 Celgene—Leader in the Orphan Drug Market

In 2024, Celgene, specializing in rare diseases, will continue to dominate the orphan drug sector with $13.7 billion in revenue. Its blockbuster multiple myeloma drugs, Pomalyst and Revlimid, will contribute over $12 billion in revenue.

Revlimid is the star product on which Celgene heavily relies, possessing anti-angiogenic and antitumor properties. In 2018, the drug achieved sales of $9.685 billion, accounting for 63.4% of Celgene’s annual revenue. Reportedly, some patents for Revlimid will not expire until 2027, and its market share is not expected to be shaken before 2022. Furthermore, in 2019, Celgene repeatedly increased the unit price of the drug to safeguard Revlimid’s dominant position as a first-line therapy. Despite drawing widespread criticism, Wall Street analysts predict that the drug’s sales will continue to maintain a double-digit growth rate.

Celgene’s second best-selling drug, Pomalyst, generated $2.04 billion in sales in 2018, a year-on-year increase of 26.4%. Buoyed by these two flagship products, Celgene has maintained robust growth for three consecutive years. However, in the coming years, the company must diversify its revenue streams, particularly by reducing its reliance on Revlimid. If Celgene fails to identify effective alternative products before generics make significant inroads into the market, it risks facing a decline in revenue.

However, such concerns are unwarranted for Celgene, which was acquired by Bristol-Myers Squibb for $74 billion. The company boasts a robust R&D pipeline, with its investigational products in inflammation and hematologic oncology expected to achieve peak annual sales of $20 billion post-launch. Notably, Celgene is poised to gain approval for five new drugs in 2020. Among them, the cell therapy liso-cel has demonstrated favorable efficacy and safety in clinical trials for the treatment of relapsed or refractory non-Hodgkin lymphoma, earning recognition as a promising orphan drug within the industry.

TOP 2 Roche: The Hematology Orphan Drug Leader Under Siege

In 2018, Roche generated $10.3 billion in revenue from orphan drugs, accounting for 18% of its total annual revenue. In 2024, Roche will continue to hold two orphan drug products with revenues exceeding $2 billion each, maintaining a dominant position in the field of hematologic orphan drugs.

Rituxan, an orphan drug for hematologic malignancies, is one of Roche’s blockbuster drugs. In 2018, it generated $6.75 billion in revenue, accounting for 12% of Roche’s annual sales. However, Rituxan is currently facing the threat of a patent cliff. In November 2018, Truxima, a biosimilar developed by global generic pharmaceutical giant Teva Pharmaceuticals, received FDA approval for market launch. In February 2019, Henlius Biologics’ rituximab injection was also approved for marketing in China. Additionally, Pfizer and Amgen are developing biosimilars of Rituxan.

Facing intense competition from generic drugs, Roche has had to seek new growth drivers in novel therapeutics. Hemlibra, approved in 2017 for the treatment of hemophilia, is the only prophylactic therapy for patients with hemophilia A and factor VIII deficiency, and it can be administered subcutaneously. Since its launch, it has become a new growth engine for Roche, with the potential to reshape the hemophilia market landscape. In 2024, Hemlibra is projected to generate $3.4 billion in total sales. Additionally, Risdiplam for spinal muscular atrophy, Ipatasertib (an AKT inhibitor) for triple-negative breast cancer, and Polatuzumab Vedotin for lymphoma are expected to contribute nearly $1 billion in revenue for Roche.

TOP 3 Novartis – The Orphan Drug Company with the Strongest Comprehensive Strength

In recent years, Novartis has undergone business restructuring, making significant investments in the orphan drug sector. In 2018, revenue from orphan drugs reached $10.2 billion, accounting for 20% of its total annual revenue. Sales of several flagship orphan drug products exceeded $1 billion each, with Jakafi ($2.36 billion) for myelofibrosis, Tasigna ($1.87 billion) for leukemia, and Tafinlar ($1.16 billion) for lung cancer standing out as leaders in their respective therapeutic areas.

In addition to products already on the market, Zolgensma, an upcoming orphan drug, is also highly anticipated. Last May, Novartis acquired AveXis for $8.7 billion, obtaining the orphan drug Zolgensma for spinal muscular atrophy. The drug has received FDA Breakthrough Therapy designation and Priority Review status, and is expected to be approved and launched in the first half of this year. After its launch, Zolgensma will become a significant growth driver for Novartis, with projected revenues of $1.6 billion in 2024.

Top 20 Global Orphan Drug Sales Products in 2024

II. The Three Musketeers of the Chinese Market

By the end of 2018, only approximately 200 orphan drugs had been marketed in China, less than one-third of the number available in the United States. Among these, only 16 new drugs independently developed by domestic enterprises received 20 FDA Orphan Drug Designations. Compared with the international market, China’s orphan drug market remains marginalized. However, as the market size continues to expand, domestic pharmaceutical companies have recognized its commercial value and are leveraging it as a stepping stone to enter the global market, as exemplified by companies such as Jiangsu Hengrui Medicine, BeiGene, and CSPC Pharmaceutical Group.

Jiangsu Hengrui

Jiangsu Hengrui’s flagship orphan drug is Aitan, which was independently developed by Hengrui and launched in the Chinese market in October 2014. Aitan is indicated for the treatment of metastatic gastric cancer and is the world’s first oral small-molecule anti-angiogenic targeted therapy proven to be safe and effective in advanced gastric cancer. Due to the low prevalence of gastric cancer in the United States, metastatic gastric cancer is classified as a rare disease internationally; however, China has an extremely high incidence rate, with nearly 700,000 new diagnoses annually, accounting for approximately half of the global case burden. Despite this, the domestic market for targeted therapies for metastatic gastric cancer remained entirely untapped.

According to Hengrui’s financial reports, Aitan was included in the national medical insurance coverage following the 2017 policy adjustments. In 2018, the drug’s revenue increased by 68.37% year-on-year, generating sales of RMB 1.741 billion, accounting for approximately 10% of Hengrui’s total sales that year. Evaluate Pharma projects that Aitan will maintain a 40% annual revenue growth rate over the next five years, reaching RMB 10 billion in 2024 and becoming a long-standing cash cow for Hengrui. In the broader orphan drug sector, Hengrui is expected to achieve USD 5.3 billion in revenue in 2024, continuing to lead China’s orphan drug market.

BeiGene

Zanubrutinib, a BTK inhibitor independently developed by BeiGene, has ranked among the global top 10 orphan drugs in development. Zanubrutinib is indicated for the treatment of mantle cell lymphoma and is the first Chinese anti-cancer innovative drug to receive FDA “Breakthrough Therapy Designation.”

Senior executives at BeiGene have stated, “Currently, there are only three similar drugs available internationally. Compared with competitors’ ibrutinib from Novartis and AbbVie, zanubrutinib demonstrates superior efficacy, and the international demand for BTK inhibitors is expected to be greater.”

Zanubrutinib is currently undergoing extensive clinical trials worldwide. Its marketing application in China has been included in the priority review pathway. The company plans to submit a New Drug Application (NDA) to the FDA this year or in early 2020, and it is expected to generate $1.1 billion in revenue for BeiGene in 2024.

Currently, BeiGene’s revenue is primarily derived from the sales of Revlimid and Vidaza in China. These two drugs have established a strong presence in the hematology sector, facilitating market penetration and expansion for zanubrutinib during its early launch phase.

CSPC Pharmaceutical Group

CSPC’s butylphthalide received FDA orphan drug designation in February 2018. It is primarily indicated for the treatment of acute ischemic stroke and is available in two formulations: capsules and injection. Butylphthalide is the third FDA-approved drug for amyotrophic lateral sclerosis (ALS). Compared with Sanofi’s Rilutek and Mitsubishi Tanabe Pharma’s Radicava, butylphthalide is the only cerebral microcirculation reconstructing agent with mitochondrial protective effects.

Since its inclusion in the national medical insurance scheme in 2017, the market penetration of butylphthalide has continued to rise. According to CSPC Pharmaceutical Group’s annual report, the compound annual growth rate (CAGR) of butylphthalide’s sales over the past five years has remained at 35%. In 2018, it generated RMB 4.2 billion in revenue, accounting for approximately 23% of the company’s total annual revenue, and has gradually become a blockbuster drug for CSPC Pharmaceutical Group. It is understood that the patent validity for butylphthalide expires in 2023. To address the impending patent cliff, CSPC Pharmaceutical Group has increased its clinical investment, aiming to secure approvals for additional new indications, and is expected to develop more new drugs based on various derivatives of butylphthalide.

As of May 2019, CSPC Pharmaceutical Group had four new drugs granted orphan drug designation by the U.S. Food and Drug Administration (FDA), entitling them to seven years of market exclusivity in the United States, along with tax incentives and research and development support policies. Orphan drugs have thus become a new opportunity for CSPC Pharmaceutical Group to expand into the international market.

III. The Path to Advancement for Orphan Drugs

The United States boasts nearly 600 orphan drugs, making it the most mature orphan drug market globally, a status attributable to its favorable policies and robust regulatory framework. The Orphan Drug Act stipulates that companies receiving FDA orphan drug designation are eligible for tax credits, waiver of application fees, research and development grants, expedited review, and seven years of market exclusivity post-approval. In recent years, China has intensified its support for orphan drugs, encouraging pharmaceutical companies to develop them through policy incentives and tax benefits. In 2018, China officially promulgated the First Batch of the Rare Disease Catalog, publicly listing 121 rare diseases under official auspices for the first time, thereby providing essential support for the research and development of orphan drugs.

Emphasizing Sales Over R&D: A Common Malady Among Chinese Pharmaceutical CompaniesAlthough research and development (R&D) is the fundamental basis for the survival of pharmaceutical companies, and international pharmaceutical firms with centuries of history have invested heavily in this area, domestic enterprises in China have shown little inclination to follow suit. Data indicates that the top ten global pharmaceutical companies allocate no less than 20% of their sales revenue to R&D annually, whereas Chinese pharmaceutical companies dedicate only around 2%. Instead, they channel more funds into subsidizing sales activities. If this trend persists, the market will see a proliferation of "me-too" and "me-better" drugs, while the market for original innovative drugs will remain dominated by foreign companies.

Many global pharmaceutical giants have leveraged policy advantages to achieve breakthroughs through orphan drugs. For instance, Novartis gradually penetrated the hematologic oncology market with Gleevec, while Alexion Pharmaceuticals transitioned into the rare disease sector by focusing on the research and development of rare disease treatments. Initially, these companies targeted diseases with small patient populations, then expanded indications to broader therapeutic areas after market launch, thereby capturing greater commercial value. Under increasing pressure from intense competition in major disease areas, Chinese pharmaceutical companies can draw on this experience and seize the opportunity presented by less competitive orphan drugs to expand into international markets.