In recent years, there has been a sense of elevated challenge in the development and commercialization of rare disease (RD) therapies, as well as some heightened skepticism regarding the future of investment in the space. The situation has been exacerbated by the high-profile retreat of several large pharma companies from rare disease or gene therapy programs (such as Pfizer and Biogen) and growing complexity when it comes to market access.
Nevertheless, the rare disease market is growing and it’s anticipated to generate around $500 billion annually by the early 2030s. In addition to the projected market growth, biopharma RD pipelines remain robust, with approvals continuing at a healthy pace. Of the FDA’s 46 novel drug approvals last year, 26 (57%) had Orphan Drug designation. At least 12 RD drugs already have PDUFA dates in 2026, indicating a likely continuation of the recent trend of at least 20-25 RD approvals per year.
The space is evolving, however, as it appears to be moving beyond the hype of genomic potential into a more pragmatic era marked by an evolving product mix focusing less on gene therapies and ultra rare indications and more on “larger” rare diseases. This shift is driven by a combination of factors, including regulatory changes and a sharper focus on operational scalability and realistic commercial potential.
Overall, our team has identified four key trends that are currently driving change in the RD market and should exert significant influence on how things evolve over the next 12 to 18 months. Below, let’s explore each trend individually.
Trend 1: Evolution in how assets sit within larger pharma companies’ infrastructures may jeopardize the patient-centric “Rare Disease Mindset”
As large pharmaceutical companies restructure and streamline their portfolios, RD assets are increasingly being absorbed into broader therapeutic area organizations. While this integration can improve operational efficiency, it often comes at the expense of the distinct culture and operating model required for success in rare diseases. RD development and commercialization depend on highly personalized, high-touch engagement with patients, caregivers, and advocacy communities, an approach that can be diluted when assets are managed within mass-market or specialty-pharma infrastructures. Recent strategic realignments at several major companies illustrate how rare disease programs are being folded into larger neuroscience, oncology, or immunology units rather than maintained as dedicated RD organizations.
When large companies invest in rare diseases through acquisitions, those assets are frequently placed into existing specialty pharma units that lack the specialized patient-centric capabilities that underpin RD success. These units are sub-optimally positioned to navigate ultra-small patient populations, fragmented care pathways, and complex diagnostic journeys. This structural misalignment increases the risk that rare disease programs are managed with assumptions and processes better suited to larger indications, rather than the bespoke approaches demanded by rare populations. Fortunately, some companies do not follow this template. One good example is AstraZeneca’s acquisition of Alexion, which was completed in 2021. AstraZeneca explicitly did not fold Alexion into its main business. Instead, they created “AstraZeneca Rare Disease” as a standalone unit to preserve the specialized operating model, acknowledging that blending it would negatively impact value.
A related challenge has emerged as some companies pivot toward rare oncology or niche specialty segments to offset losses of exclusivity in more traditional franchises. While these strategic shifts expand portfolios into smaller populations, they do not always include corresponding investment in the broader rare disease ecosystem. A range of critical components can be neglected or underdeveloped, such as the infrastructure for advanced patient finding, advocacy engagement, complex / bespoke logistics and supply chain management, and coordinated care support for a “high-touch” environment. Without this foundation, organizations may underestimate the operational complexity of rare disease development and commercialization, limiting their ability to generate robust evidence or deliver meaningful patient support.
The consequences of this erosion in patient-centricity are clearly visible in clinical development. Patient recruitment remains one of the greatest barriers in rare disease trials and requires deep collaboration with advocacy groups and academic medical centers, as well as experience with decentralized and hybrid trial models. Traditional CRO-driven approaches and standard site selection methods frequently fail in this context. Efficient patient identification and diagnosis depend on highly specialized skill sets that are not commonly embedded within non-RD teams. When these competencies are lost or deprioritized, development timelines lengthen and companies miss opportunities to accelerate diagnosis and treatment.
More broadly, diluting the rare disease mindset risks undermining holistic care models that extend beyond the drug itself. Loss of focus on patient-centric design can limit progress in clinical development, care coordination, adherence support, and long-term outcome tracking. Even among companies with significant rare disease footprints, formalized patient-centric teams and standardized engagement frameworks are often lacking. As organizational models evolve, maintaining dedicated rare disease expertise and recognizing the fundamentally different needs of RD populations will be critical to sustaining innovation and ensuring that operational efficiency gains don’t negatively impact patients.
Trend 2: The deal landscape is increasingly focused on commercially viable, de-risked assets, and scalable platform technologies
The rare disease deal environment is shifting, with fewer early-stage deals and a stronger emphasis on therapies that demonstrate clear commercial viability. Large pharmaceutical companies are increasingly prioritizing platforms or de-risked assets (typically post–Phase II) over higher-risk early-stage therapies.
At the same time, emerging biopharma companies are less likely to pursue rapid exits and more likely to advance RD programs through approval and commercialization themselves. In part, this is supported by the lower patient recruitment costs and more focused go-to-market requirements for RDs than are typical in mass-market indications. IQVIA’s 2025 Global Trends in R&D report noted that “Emerging biopharma companies are responsible for the largest share of early drug development and historically licensed those assets to larger firms for commercialization. These historic patterns have shifted notably in the last decade… Emerging biopharma companies originated 85% of new drugs in 2024 and originated-and-launched 63% of them.” In short, the trend is moving away from pursuing earlier exits and toward building sustainable portfolios and commercial organizations, particularly when it comes to RDs.
For large pharmaceutical companies, this is translating into a preference for partnerships over outright acquisitions, particularly in RDs. Deal structures increasingly emphasize earn-outs/bio-bucks in the form of milestone-based payments or contingent value rights, and reduced upfront capital commitments, reflecting a broader trend toward risk sharing to better manage market volatility. Even as overall deal value has risen, transaction volumes have declined, signaling a concentration of investment into fewer, larger, and more strategically aligned programs. Large pharma is also favoring “plug-and-play” opportunities—assets that fit directly into existing franchises or therapeutic strongholds—rather than building entirely new rare disease capabilities from scratch.
At the same time, artificial intelligence (AI)-powered approaches are supporting RD drug discovery and identifying opportunities to repurpose drugs for treating rare conditions. Partnerships between AI firms and traditional pharmaceutical companies—such as Pfizer, AstraZeneca, Janssen, and Sanofi, and others—highlight the growing strategic importance of this approach. We should see increased scalability and accelerated impact in the market in the coming year.
Taken together, these dynamics point to a more selective RD deal environment. Deal activity is increasingly concentrated on later-stage or platform-enabled assets that offer both reduced technical risk and clearer commercial pathways. For smaller companies, this creates incentives to build broader portfolios and retain assets longer, while for larger companies it reinforces a disciplined approach centered on therapeutic fit, operational integration, and long-term value creation.
Trend 3: US regulatory shifts are “moving the goalposts” for rare disease development
Recent U.S. regulatory initiatives signal a meaningful shift in how rare disease (RD) therapies are evaluated and brought to market. Collectively, these developments reflect increased regulatory focus on rare diseases and greater flexibility in evidence standards to help patients access critical therapies sooner. While it’s still uncertain how these initiatives will operate in practice, the overall direction appears to support innovation in RD drug development. The FDA’s Rare Disease Innovation Hub (launched in late 2024) and Rare Disease Evidence Principles (RDEP, introduced in 2025), underscore the agency’s intent to modernize and harmonize approaches across CDER and CBER for ultra-rare and genetically defined conditions.
The RDEP initiative establishes a structured pathway for diseases with a known genetic defect, very small patient populations, rapid disease progression, and limited or no disease-modifying treatments. By clarifying expectations around evidence generation for these high-unmet-need populations, RDEP aims to reduce uncertainty for sponsors while maintaining standards for safety and efficacy.
In its third annual report, the FDA’s Accelerating Rare Disease Cures (ARC) Program highlights record levels of rare disease activity, with rare disease therapies accounting for 26 out of 50 new drug approvals in 2024 (52%). That’s a strong indication that regulatory prioritization is translating into measurable output.
Legislative changes are reinforcing these regulatory trends. The Orphan Drug Act remains a cornerstone of rare disease incentives, and recent provisions in the One Big Beautiful Bill Act (OBBBA) further strengthen its protections by expanding negotiation exemptions for drugs with multiple rare disease indications and delaying Medicare price negotiations until a product receives a non-orphan indication.
These changes meaningfully affect commercial planning by extending effective exclusivity periods and improving the long-term revenue outlook for rare disease assets. At the same time, the Rare Pediatric Disease Priority Review Voucher (PRV) program—previously expected to sunset—was re-authorized by Congress earlier this month by incorporating the language of the “Give Kids a Chance Act” into the larger appropriations package. Extension of the program through September 2029 maintains an important financial and strategic incentive for companies developing therapies for pediatric RDs.
Another emerging development is the FDA’s “Plausible Mechanism Pathway,” published in 2025, which outlines a roadmap for approval based on strong mechanistic understanding paired with clinical data. Initially focused on cell and gene therapies, this framework could eventually extend to other novel modalities. Importantly, the agency has emphasized that this pathway does not require new statutory authority, meaning that products must still meet existing standards for safety and effectiveness. However, the approach reflects growing regulatory openness to leveraging biological rationale and smaller datasets when traditional large-scale trials are not feasible.
Collectively, these shifts are “moving the goalposts” for rare disease development and reshaping expectations for evidence generation, timelines, and regulatory engagement. For biopharma companies, this environment creates both opportunity and complexity: faster potential routes to approval, but also greater strategic importance placed on regulatory planning, early scientific alignment with the FDA, and thoughtful trade-offs between speed, evidence depth, and long-term value.
Trend 4: U.S. policy shifts are reshaping global price potential and intensifying scrutiny of the economic value of rare disease therapies
U.S. policy developments are increasingly influencing how RD therapies are priced, reimbursed, and perceived in terms of value, both domestically and globally. Federal priorities around affordability, budget impact, and long-term sustainability are challenging the long-standing model that justified premium pricing based on high unmet need and low prevalence. As policymakers focus more explicitly on economic value, rare disease products are facing a higher bar to demonstrate not only clinical benefit but also financial justification within constrained healthcare budgets
Although the OBBBA expanded the Orphan Drug Exclusion under the Inflation Reduction Act (IRA) Medicare Drug Price Negotiation Program, the IRA continues to influence manufacturer strategy. Products with both orphan and non-orphan indications remain exposed to negotiation risk, shaping portfolio prioritization, launch sequencing, and life-cycle management decisions. This evolving policy landscape creates trade-offs for developers seeking to expand indications beyond rare populations while preserving long-term pricing flexibility. As a result, regulatory success alone is no longer sufficient to ensure commercial viability, and economic positioning must be addressed much earlier in development.
New federal initiatives are also testing alternative reimbursement models that could have broader implications for rare disease therapies. The recently launched Cell and Gene Therapy (CGT) Access Model, initially focused on sickle cell disease, introduces outcome-based payment concepts within government programs. While its ultimate scope remains uncertain, the model signals growing interest in tying reimbursement for high-cost, potentially curative therapies to real-world performance. If expanded to other conditions, this approach could reshape how “game changing” rare disease treatments are financed, shifting risk from payers to manufacturers and increasing the importance of long-term outcomes data.
Beyond formal policy mechanisms, increased emphasis on affordability and value is also influencing clinical behavior. Prescribers are becoming more attuned to cost considerations and coverage dynamics when making treatment decisions—an especially consequential shift in rare diseases, where therapeutic alternatives are often limited and patient access can hinge on payer approval. Overall, the impact is clear for biopharma companies that develop and market RD therapies: they must navigate a more complex environment in which pricing power is no longer assumed and evidence must extend beyond clinical endpoints to include durability, quality-of-life impact, system-level cost implications, and more.
Looking Ahead
Over the coming year, we will be exploring each of these RD trends (and more) in further detail. Follow Blue Matter on LinkedIn or check our Insights page regularly to stay up-to-date on our latest publications. In addition, please contact us via our website if you have any questions or if you would like to discuss development and/or commercial strategy for your company’s rare disease product(s) or portfolio.
