Surging Biotech M&A Highlights Massive Opportunity in Rare Disease Drug Development
TL;DR
Investing in orphan drug development offers substantial growth potential with sales reaching $185 billion this year and projected to hit $270 billion by 2028.
Orphan drugs, encouraged by U.S. FDA's orphan drug designation, have consistently outpaced growth and become a major part of pharma’s mainstream business.
Investment into the unmet need of rare diseases is warranted, as it makes the world a better place by providing treatments for diseases affecting fewer than 200,000 people in the U.S.
The surge in M&A activity among orphan drug developers, including the acquisition of GW Pharmaceuticals by Jazz Pharmaceuticals, demonstrates a significant opportunity in the orphan drug development sector.
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The biotechnology sector is witnessing an unprecedented surge in mergers and acquisitions (M&A), underscoring the immense opportunity in the development of drugs for rare diseases. Orphan drugs, which target conditions affecting fewer than 200,000 people in the U.S., have consistently outpaced their non-orphan counterparts, becoming a major part of pharma’s mainstream business.
According to recent data, sales from orphan drugs soared to $168 billion last year, representing approximately 17% of the pharmaceutical industry's total revenue. This figure is just shy of the oncology therapeutic category, which stands at $194 billion. The current year is on track to see orphan drug sales hit $185 billion, with projections estimating a rise to around $270 billion by 2028. Such robust growth rates suggest that continued investment in rare disease treatments is warranted.
This surge in M&A activity is exemplified by several high-profile transactions. One notable example is the acquisition of GW Pharmaceuticals by Jazz Pharmaceuticals in 2021 for $7.2 billion. This acquisition followed the successful treatment of rare childhood epilepsy with Epidiolex, a novel cannabidiol-based drug. The 120-patient trial showed that patients taking Epidiolex experienced a median reduction in monthly convulsive seizures of 39% compared to a 13% reduction with a placebo.
Another significant player in this space is Cardiol Therapeutics (NASDAQ:CRDL), a Canadian biotech firm focused on developing CardiolRx™, a novel ultrapure cannabidiol formulation for rare inflammatory heart diseases like recurrent pericarditis and acute myocarditis. Pericarditis, characterized by inflammation of the pericardium, affects about 165,000 people in the U.S. annually and has no first-line FDA-approved treatment. Cardiol Therapeutics has made strides by completing enrollment in its Phase 2 MAvERIC-Pilot study and presenting its Phase II ARCHER trial design at the Heart Failure Association of the European Society of Cardiology congress.
In another significant development, Novo Nordisk (NYSE:NVO) announced its acquisition of Cardior Pharmaceuticals for up to $1.11 billion. This move aims to bolster Novo Nordisk's pipeline of cardiovascular drugs and expand its reach beyond its core diabetes and weight-loss markets. Cardior’s lead compound, CDR132L, is currently in Phase 2 clinical trials and is designed to halt and reverse detrimental cardiac remodeling following myocardial infarction.
AstraZeneca (NASDAQ:AZN) also made headlines with its acquisition of Amolyt Pharma for $800 million. This acquisition aims to enhance AstraZeneca's rare disease pipeline, particularly in the area of bone metabolism. Amolyt Pharma's eneboparatide (AZP-3601), a Phase 3 investigational therapeutic peptide, is designed to treat hypoparathyroidism, a condition affecting around 115,000 people in the U.S. and 107,000 in the EU.
Sanofi (NASDAQ:SNY) earlier this year agreed to buy Inhibrx Inc. for up to $2.2 billion. This acquisition will add INBRX-101, a potential therapy for a genetic disorder affecting the lungs and liver, to Sanofi's rare disease portfolio. The deal reflects Sanofi's strategy to focus on differentiated and potentially best-in-class products.
These acquisitions and investments highlight the growing interest and potential in the rare disease drug development sector. With significant market opportunities and the promise of innovative treatments, the biotechnology industry is poised for continued growth and transformation.
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