Orphan Drugs to Plug Pipeline Gaps

Orphan drugs may help pharmaceutical companies reduce the effect of revenue loss caused by patent expirations of blockbuster drugs, according to market analysts Frost and Sullivan.

"The current economic situation plus the huge generic competition shifted the focus of pharmaceutical companies and they are moving to a new business model -'niche busters,' also called orphan drugs," Frost and Sullivan healthcare consultant Shabeer Hussain said in a press release. He also explained that approximately $99 billion worth of branded drugs will lose exclusivity in the next five years.

The analysts said that the pharmaceutical industry's growth has slowed in recent years because of patent expirations, drying pipelines, and increasingly stringent regulatory guidelines. According to Frost and Sullivan, the new business model of orphan drugs could offer an integrated healthcare solution that enables pharmaceutical companies to develop new areas of therapeutics, diagnosis, treatment, monitoring, and patient support. In a press release, the analysts said, "Clinical trials for orphan drugs are run efficiently with smaller patient groups, thereby reducing costs significantly. Incentives for drug development provided by governments, as well as support from the FDA and EU Commission in special protocols are a further boost for companies developing orphan drugs."

Frost and Sullivan also noted that the cost of developing and marketing an orphan drug can be reduced if pharmaceutical and biopharmaceutical companies enter into partnerships by licensing products to maintain revenue.

"The global pharmaceutical industry is beginning to grow and expand, but part of the reason is because this year has been the year of biopharmaceuticals," said Hussain in the press release. "Biopharmaceuticals are likely to continue to take the major share of the pharmaceutical industry and be in direct competition with the small-molecule drugs. These effects will create new consolidated companies and this will change the landscape of the pharmaceutical industry," he added.