Thanks to the potential for higher prices, limited competition and favorable regulations, orphan drugs continue to be popular to manufacture and also attractive to buy, and Moody’s predicts they will continue to generate merger and acquistion activity.
Nearly half of recent acquisitons involved orphan drugs, or medications that treat serious conditions that affect fewer than 200,000 patients, Moody’s SVP Michael Levesque noted in a recent research report, according to FiercePharma.
“Favorable credit characteristics of pharmaceutical companies that produce orphan drugs include high barriers to entry and the life-threatening nature of orphan diseases that require patients to stay on therapy for life,” he said in a statement, according toFiercePharma. In addition, orphan drugs often come with patent bonuses, offering extra protection beyond normal IP shield expiration dates.
Buyers should proceed with caution, though; some analysts say that the availability of low interest rates is leading to some poor purchasing choices.