Regulatory whiplash has hit orphan drug developers in recent months. On the one hand, the FDA has signaled broad support for rare drug development. On the other, it recently issued several high-profile denials for rare disease drugs, including Regenxbio’s Hunter syndrome therapy.
This disconnect between regulatory talk and action has created an unpredictable environment for drugmakers, according to a recent Evaluate report.
"There were mixed responses to a number of submissions to the FDA in 2025 in the orphan space. While it is too early to establish if this is a new pattern or a fundamental change in expectations, the impact of these decisions can add to uncertainty,” said Andreas Hadjivasiliou, manager of content strategy for Evaluate, in an email.
Some failed drugs in this space appear to have faced stricter standards and, at times, contradictory feedback on trial design, raising the bar for a drug category that already struggles with trial complexity due to small patient populations.
For example, when the FDA rejected Biohaven’s troriluzole for spinocerebellar ataxia, it raised concerns about trial design including the use of real-world evidence, even though the agency had previously provided input on the study design.
“The FDA issued a complete response letter despite Study 206-RWE being reviewed by FDA and achieving statistical significance in the study’s prespecified primary and secondary outcome efficacy endpoints,” Biohaven said in a press release. “FDA cited issues that can be inherent to real-world evidence and external control studies including potential bias, design flaws, lack of pre-specification and unmeasured confounding factors.”
A potentially fickle FDA is adding another source of adversity for the market.
Big drugs threaten orphan momentum
Rare drugs are expected to face growing competition in the coming years from big-ticket therapies targeting larger indications such as weight loss drugs, as well as CNS and autoimmune therapies. These mainstream drugs can be more appealing to investors seeking lower-risk bets on larger patient populations, Evaluate stated in its report. That perception can become bolstered by FDA policies.
“Policies such as the FDA Commissioner’s National Priority Review Vouchers, or guidance around treatment of CAR-T cell therapies, remain incomplete or opaque,” the Evaluate report states. “This uncertainty has led some investors to steer clear of complex, high-risk modalities in favor of tried-and-tested mechanisms in more widespread, better-understood conditions.”
Another potential market confounder is China, now a rising competitor to Western pharmaceutical companies. China-originated molecules, particularly bispecific antibodies, could start to put pricing pressure on Western options, according to Evaluate. Chinese companies also have a growing share of FDA orphan drug designations, rising from less than 5% in 2020 to 15% in 2025.
“Chinese biotechs are generating potentially best-in-class molecules at a fraction of the cost–and time–required in many Western countries,” the report noted.
Even so, Evaluate analysts expect orphan drugs sales to rise to 21% of all drug sales in 2032 — up from 15% in 2022.
But the share of overall drug sales from candidates now in the orphan pipeline are also expected to drop from a projected high of 30% of all prescription sales in 2027 to 22% in 2032. Ultimately, new orphan drugs could cede market ground to up-and-coming blockbusters like Eli Lilly’s phase 3 oral GLP-1 orforglipron, which could hit almost $20 billion in sales by 2032, according to Evaluate.
Building momentum
Blockbusters like Johnson & Johnson’s multiple myeloma drug Darzalex, which is on track to pull in $400 billion in sales by 2032, are generating momentum in the orphan drug space, according to Evaluate.
Favorable policy shifts could also provide tailwinds for the industry, including a crucial revision to the Inflation Reduction Act.
“Tweaks to the IRA through the current administration’s One Big Beautiful Bill Act expanded orphan exemptions to include multi-indication drugs,” an Evaluate press release states.
In addition, Congress reauthorized the Rare Pediatric Disease Priority Review Voucher program, paving the way for faster FDA review times for drugs to treat rare childhood conditions.
Despite some of the negative undercurrents, the orphan drug market is demonstrating resilience.
“We continue to see drugs for rare diseases cement their place as major players in the overall drug market,” Hadjivasiliou said. “Their capacity to navigate a changing industry, policy, and regulatory changes while maintaining momentum is something to be noted by developers in this space and in the mainstream drug markets as well.”
