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Biotech and Orphan Drugs Create New Revenues for Drug Firms, Business and Industry Trends Analysis

Many biotech companies have focused on developing drugs for relatively small patient populations.  For example, biotech pioneers Genentech and Biogen Idec developed Rituxan for the treatment of non-Hodgkin’s lymphoma, an important but relatively small market.
Drugs such as Rituxan are commonly referred to as “orphan drugs,” which means that they treat illnesses that no other drug on the market addresses, which are needed by relatively small patient populations.  Technically, a drug designated by the FDA with orphan status provides therapeutic benefit for a disease or condition that affects less than 200,000 people in the U.S.  These drugs enjoy a unique status due to the Orphan Drug Act of 1983, which gives pharmaceutical companies a seven-year monopoly on the drug without having to file for patent protection, plus a tax credit for research and development costs.  
Orphan drugs, however, receive expedited approval from the FDA, greatly reducing the costs of clinical trials.  Long-term profit is also more likely for orphans.  While brand-name drugs lose 80% of their market value within one year of patent expiration, biotech and orphan drugs face less generic competition because of the difficulty in developing generic versions once they go off-patent.
The number of new drugs approved by the U.S. FDA in 2021 was 50, of which 26 were orphan drugs.  Orphan drugs approved during 2021 included Odevixibat, for the treatment of progressive familial intrahepatic cholestasis (PFIC); Sotorasib, for the treatment of non-small-cell lung cancer; and Avalglucosidase alfa, for the treatment of late onset Pompe disease.

Commentary: The Challenges Facing the Biopharmaceuticals Industry
=         Working with governments to develop methods to safely and effectively speed approval of new drugs.  Many observers contend that FDA approval is much too slow and cumbersome.
=         Working with the investment community to build confidence and foster patience for the lengthy timeframe required for commercialization of promising new drugs.
=         Working with civic, government, religious and academic leaders to deal with ethical questions centered on stem cells, personalized medicine and other new technologies.
=         A growing level of consumer and government discontent with soaring drug prices.
=         Fostering payer acceptance, diagnostic practices and physician practices that will harness the full potential of genetically targeted, personalized medicine as the base of potentially expensive but highly effective biopharmaceuticals grows.
Source: Plunkett Research, Ltd.

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