Sangel Capital Explores New Frontiers in Rare Disease Investment with Precision Medicine Focus

According to statistics from the U.S. Food and Drug Administration (FDA), there are more than 7,000 known rare diseases worldwide, affecting over 250 million people, nearly 50% of whom are children. Eighty percent of rare diseases are caused by genetic defects, particularly single-gene mutations. This means that the etiology of most rare diseases is well-defined, allowing for more direct research into therapeutic approaches. Rare diseases, also known as “orphan diseases,” are defined as conditions affecting a population below a certain prevalence threshold, and their treatments are referred to as “orphan drugs.” While there is no globally unified numerical definition for this “threshold,” a low prevalence does not necessarily imply a small absolute number of patients. With the rapid advancement of precision medicine, competition across various product pipelines has intensified, bringing greater visibility and understanding to rare diseases.

Among the more than 7,000 known rare diseases, the majority pose life-threatening risks or severely compromise patients’ quality of life; however, currently fewer than 10% have approved therapeutic drugs or regimens. In China, only 1% of effective drugs are available. According to the “2019 Report on Drug Accessibility for Rare Diseases in China,” which reviews global pharmaceuticals for the 121 conditions listed in the first National Catalogue of Rare Diseases, 21 rare diseases in China face the dilemma of “drugs available abroad but not domestically.”

China’s research in the field of rare diseases started relatively late. The drugs that have been approved or are under review represent only a drop in the bucket, and there are no classic cases of orphan drug development yet. The path to R&D still faces multiple challenges. In May 2018, the Chinese government defined what constitutes a rare disease for the first time by publishing the "First Batch of Rare Diseases Catalogue." According to epidemiological literature and public data estimates, these 121 rare diseases affect approximately 3 million patients in mainland China. Health technology assessments related to rare diseases present significant specificity and challenges; domestic rare disease research lacks data, and treatments lack standardization. Additionally, more solutions need to be explored regarding disease burden studies and the direction of medical insurance reforms, which also implies a broader market waiting to be tapped.

In recent years, drug development for major mainstream diseases has entered the revenue-generating phase, leading to gradual market saturation. In contrast, although the rare disease market is smaller in scale, it faces less competition, making it an attractive opportunity for major international pharmaceutical companies. In 2018, the FDA approved a record 61 new drugs, more than half of which (31 drugs, accounting for 51%) targeted rare diseases. According to a report by EvaluatePharma, the orphan drug market is projected to achieve a compound annual growth rate (CAGR) of 11.1% from 2017 to 2022, significantly higher than that of the non-orphan drug market (with a CAGR of only 5.3%). By 2022, total orphan drug sales are expected to reach $209 billion, representing 21.4% of global pharmaceutical sales. The market performance of orphan drugs is projected to outperform the overall prescription drug market.

China is currently in a prime period for the development of rare disease research, with the state elevating the prevention and treatment of rare diseases to the level of a fundamental health right and a critical livelihood issue. In 2016, the National Clinical Cohort Study Project for Rare Diseases was initiated, and the National Rare Disease Registry Platform was established. In 2018, the government released the first batch of the National List of Rare Diseases, streamlined registration applications for rare disease drugs, and allowed the conditional acceptance of overseas clinical trial data. This February, the government introduced tax reduction and management policies for medications used to treat rare diseases, encouraging comprehensive preferential measures in the research and development, approval, manufacturing, importation, and taxation of orphan drugs. In the coming years, as policies are continuously implemented and upgraded, Chinese pharmaceutical companies will inevitably expand their pipelines in orphan drugs.

On the other hand, technological iteration has also invigorated the rare disease market. Advances in genomics and gene sequencing technologies have made the identification of rare diseases and drug development more convenient and rapid. LAM Therapeutics, invested by Shenzhen Sangel Venture Capital Co., Ltd., is one of the “market pioneers” dedicated to combining biology with computer science, leveraging big data from next-generation sequencing, genome editing, chemogenomics, and combinatorial drug screening to develop precision therapeutics, companion diagnostic solutions, and drugs for rare diseases and cancer. Currently, orphan drugs have become a key focus area for global cutting-edge innovative drug R&D and the development of related research tools. Judging by the trend of drugs approved by the FDA in 2018, it is expected that more orphan drugs for rare diseases will enter the market in the coming years, and these orphan drugs can capture the largest market share upon launch. Investors or developers such as Shenzhen Sangel Venture Capital, who act ahead of the curve and strategically position themselves early, are bound to achieve the best return on investment before the orphan drug market becomes a red ocean.

Taking the current “blockbuster” trend of precision medicine as an example, Shenzhen Sangel Venture Capital Co., Ltd. (Sangel Capital) adopted this concept as its investment theme as early as eight years ago, focusing on incubating oncology treatments within the realm of precision medicine. While precision medicine has since become a highly competitive “red ocean” market, Sangel Capital had already taken the lead in niche segments, deeply cultivating the most challenging areas. The curtain is quietly rising on competition in the rare disease market. With technological advancements, more specialized fields and faster iterations are expected to emerge in the future. In addition to forward-looking awareness, market entrants require professional teams to accurately assess the commercialization potential of their solutions. Over its nine years of focused investment in biomedicine, Sangel Capital has accumulated extensive experience.

Shenzhen Sangel Venture Capital Co., Ltd. focuses on investments in precision medicine, dedicating itself not only to broad-spectrum targeted therapies but also to orphan drugs. The challenges associated with rare diseases—such as small patient populations, long-standing neglect, insufficient research data, and a lack of clinical experience in diagnosis and treatment—are global issues. Bringing drugs to market holds significant importance for improving patients’ quality of life. With timely and standardized administration, existing effective medications for rare diseases can gradually control the condition, ultimately enabling disease management as a chronic condition. The unique nature of these diseases and their patient populations necessitates national policy support, assistance, or regulation. Further coordination is required in areas such as external reference pricing for orphan drugs, purchasing power calculations, price negotiations, and payment mechanisms involving multiple stakeholders, including state finances, medical insurance reimbursement, and patient families. As more families begin to see hope, the societal burden of these diseases is correspondingly alleviated.

For investors, the continuous expansion of orphan drug indications makes EvaluatePharma’s projection that “global orphan drug sales are expected to reach $209 billion in 2022” truly exhilarating. Orphan drugs have become a key driver of revenue growth for pharmaceutical companies. However, the rapid iteration of market dynamics and technology demands greater foresight from market entrants. While accurately identifying development trends in the rare disease sector, players must also make flexible adjustments in response to changes in policy and the industrial ecosystem, ensuring precise investments that optimize the return on investment.