Orphan drugs have attractive attributes for development as they are potentially cheaper, faster, and less risky to develop compared to non-orphan drugs. They also have high sales potential in small distinct patient populations. Specifically, orphan drug development costs are about half that of non-orphans and their time to market is faster. They also have a higher regulatory approval success rate. This makes orphan drugs a growth opportunity, with their market forecast to reach 20% of prescription drug budgets by 2020 due to an 11.7% CAGR, higher than the 4.7% CAGR for non-orphans. Top orphan drugs are primarily in oncology and command very high prices, with the median orphan drug costing $66

1. Orphan drugs – why the hype?

2. Two fundamental reasons
2
Development potentially cheaper, faster and less risky
High sales potential in small distinct patient populations

3. Development of orphan drugs may have attractive attributes
3
Sources: Meekings, Drug Discovery Today &
Orphan Drug Report 2015, EvaluatePharma
Costs (“cheaper”):
§ Phase III orphan drug development cost half that of non-orphan, and considering US Tax Breaks potentially a quarter of
the cost of non-orphan. A US development programme is estimated to US$ 103m versus US$ 193m (plus tax breaks)
§ Phase III trial size is approx 20% of a non-orphan. In the US, the average phase III trial enrol 3,549 patients versus 761
in a rare disease trial
§ Expected phase III costs with an orphan designation is US$ 6.9bn vs US$ 23.1bn without such label
Time-to-market (“faster”):
§ Average time from phase II to launch is 3.9 y for orphan drugs versus 5.4 y
for non-orphans – with a decreasing trend
§ Orphan drug FDA approval time 10 months vs. 13 months for non-orphan
Success rate (“less risky”):
§ At 93% probability for final regulatory success orphan drug candidates
fare better than non-orphan at 88%
§ Free regulatory advice in development process is believed to facilitate a
smoother, faster and more successful approval process

4. Drivers for orphan drug innovation
R&D drivers Commercial drivers
Tax credits (US) Market exclusivity
R&D grants Fast market penetration
Waived/reduced FDA/EMEA fees Low S&M costs
Shorter time-to-market Premium pricing
Regulatory approval rate higher Fewer market access hurdles
Favourable reimbursement
4Sources: Adapted from Meeking, Drug Discovery Today, 17, 2012 & Datamonitor
Significant blockbuster potential:
30% of orphan drugs achieve turnover of $1 billion or more

5. Growth opportunity:
By 2020, orphan drugs could occupy 20+% of the budget for prescription medicines
§ sdfasdf
5
1.5% 4.7%
3.0%
0.3%
2.0%
2.9%
§ Global orphan drug market forecasted CAGR 2015-20: 11.7%
§ Global non-orphan drug market forecasted CAGR 2015-20: 4.7%
§ Prescription excluding generics forecasted CAGR 2015-20: 5.9%
Growth in non-
orphan drugs
Source: EvaluatePharma Orphan Drug Report 2015

6. Forecasted top-15 orphan drug by 2020
Drug
Company
Original
therapy area
2014
sales*
2020
projection*
CAGR
1
Revlimid
Celgene
Oncology
4’980
10’058
12%
2
Opdivo
BMS
Oncology
6
8'912
233%
3
Soliris
Alexion
Blood disorder
2'234
5'414
16%
4
Keytruda
Merck
Oncology
55
5'297
114%
5
Rituxan
Roche
Oncology
7'547
5'117
-7%
6
Orkambi
Vertex
Cystic fibrosis
5'051
7
Imbruvica
AbbVie & J&J
Oncology
2'982
8
Esbriet
Roche
Oncology
48
2'492
93%
9
Tasigna
Novartis
Oncology
1'529
2'331
7%
10
Pomalyst
Celgene
Oncology
680
2'060
12%
11
Alimta
Lilly
Oncology
2'792
2'019
-5%
12
Gazyva
Roche
Oncology
54
1'932
82%
13
Advate
Baxalta
Hemophilia
2'348
1'918
-3%
14
Kyprolis
Amgen
Oncology
331
1'857
33%
15
Ocaliva
Intercept
Hepatology
1'827
6
* million US$
Many companies have orphan drugs in development with potential to make the top tier
– BioMarin
– Biogen (Iodis Pharmaceuticals)
– Roche
– Celgene
– Boehringer Ingelheim
– Vertex
– Alexion and many more
Sources: Financial Times & Citeline (Datamonitor), 2016

7. Prices of orphan drugs are high
§ Orphan drug prices are significantly higher than for those of normal prescription
medicines
– Price elasticity is low (note: we will be addressing this aspect shortly)
– Market access is easier (note: we will be addressing this aspect shortly)
§ Amongst orphan drugs biologics are priced highest
7
Sources: EvaluatePharma Orphan Drug Report 2015 &
LifeSci CAPITAL Equity Research, 2016
Top 100 US orphan drug cost in US$ per patient per year. In 2014, the median was US$ 66,057.

8. The fewer patients the higher the price:
Ultra-orphan drugs command peak prices
§ Markets with less than 10,000 patients support pricing of US$ 200,000+ per patient year
§ Soliris (Alexion) is priced at US$ 400,000+ per patient year
8Source: LifeSci CAPITAL Equity Research, 2016
US data only

9. Further information on orphan drugs
9
Approvals 1983 – 2013
Number of orphan drugs approved in the US 151
Number of orphan drugs approved in the EU 140
Number of orphan drugs first approved in the US 76
Number of orphan drugs first approved in the EU 64
Sources: Cohen JP. Formulary Journal, Sept, 2014 &
Orphan Drug Report 2015, EvaluatePharma
§ Median cost per patient 13.8 times higher for orphan drugs compared to non-orphan
§ Phase III orphan drug development cost half that of non-orphan, and potentially a quarter of the
cost of non-orphan with US Tax Breaks. No advantage in phase III development time
§ Orphan drug FDA approval time 10 months vs. 13 months for non-orphan
§ Orphan drug prices are significantly higher than those for non-orphan and the average is
estimated at US$ 110,000 per patient year. Biologics are priced the highest
§ Record year for FDA orphan approval in 2014 with 291; Record number of European designations
too with 201; Japan designations up 7%
§ 19.4% of EU orphan designations for ultra-rare diseases

10. Orphan drug breakdown by therapeutic category US & EU (2013)
10Source: Cohen JP. Tufts CSDD analysis, 2014
In 2014, more than one-third of U.S. marketing
approvals for new medicines were for orphan
drugs. This trend continues, with nearly 40% of
new orphan approvals during the next five years
expected to be related to cancer treatment.
5%
31%
13%
1%5%1%
6%
3%
11%
1%
7%
5%
6%
4% 1%1%
Auto-immune Cancer Genetic disorders Tuberculosis
Blood disorders Organ transplantation HRT Eye disorders
Other Cardiovascular Neorological Infectious
Respiratory Growth Enzyme replacement Stem cell therapy
Split in therapy areas is based on number of drugs
approved. The total monetary value is greatest for
the oncology area.

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