What are rare diseases, and why are drug sales predicted to grow?

A trend over the last few years is that companies that treat rare/orphan diseases (“rare diseases”) have become an increasing part of the Trust’s portfolio, making up 19%, 26% and 31% of the Trust’s holdings at the end of January 2019, 2020 and 2021, respectively. The growth in the portfolio composition of this therapeutic area mirrors, to some extent, the absolute and relative growth in the market for drugs used to treat rare diseases (see Figure 1: worldwide total prescription drug sales - historical and future sales estimates). From 2020-2026, sales for drugs used to treat rare diseases are expected to grow by 10.5% per year, compared to the overall prescription drug market that has a projected sales growth rate of 7.4% per year, over the same period.

Figure 1: Worldwide total prescription drug sales (2012-2026)

Source: EvaluatePharma, World Preview 2020, Outlook to 2026

What are rare diseases, and why does this therapeutic area appear to have an upward trajectory? The official definition is a disease with a limited number (prevalence) of individuals affected. In the U.S. this is defined as less than 200,000 persons affected (https://www.fda.gov) and in the EU, a disease is considered rare when less than 5 in 10,000 individuals are affected (https://www.ema.europa.eu). The higher growth rate in the sales of rare disease drugs is linked to the success in identifying a greater number of single gene mutation diseases. Well known examples of these diseases are cystic fibrosis and haemophilia.

The Trust’s Top 10 holdings are well positioned to treat several rare diseases. Genetic mutations are thought to be the main cause of rare diseases, and there are various ways to treat these, including substituting the non-working protein (caused by a mutation in the gene) with the right version of the protein. BioMarin has several drugs on the market that are categorised as substitution therapies, e.g., Naglazyme for Maroteaux-Lamy MPS VI, Aldurazyme for MPS I, and Vimizim for Morquio, a syndrome MPS IVA. BioMarin is also developing gene therapies for haemophilia A and other single gene mutation diseases.

Other types of therapies aim to correct a protein that is malfunctioning due to gene defects. Vertex, another of the Trust’s Top 10 holdings, has developed several modulating drugs for cystic fibrosis - potentiating, correcting, and amplifying a chloride channel protein.

Not all rare diseases have a single gene mutation characteristic. Horizon Therapeutics, the largest holding of the Trust at the end of January 2021, is focussed on a condition that meets the definition of a rare disease due to the lower number of people affected. Horizon markets Tepezza, a treatment for thyroid eye disease (TED), and Krystexxa, for out-of-control chronic gout. Both these drugs have had strong sales despite the COVID-19 pandemic.

It is actually not that rare to be diagnosed with a rare disease (https://rarediseases.info.nih.gov). Due to the advances in gene sequencing within the biotech sector, an increasing number of single gene mutation diseases have been identified and diagnosed - increased from 1,257 in 2001 to 4,377 in 2021 (https://omim.org). This has led to an increase in the number of therapies developed and marketed, supporting the higher growth outlook for this therapeutic area.