Authors: Hyun Jin Baek (Korea), Yoojun Nam (Korea), Yeri Alice Rim (Korea), Ji Hyeon Ju (Korea)
Categories: Review Article, Stem cell therapy, Genetic therapy, Advanced therapy, Rare diseases, Orphan drug production, Regulation
Source: International Journal of Stem Cells
Doi: 10.15283/ijsc25028
Authors: Hyun Jin Baek, Yoojun Nam, Yeri Alice Rim, Ji Hyeon Ju
A rare disease is generally defined as a medical condition that affects a small proportion of the population, though specific thresholds vary across countries. Despite regional differences, these definitions consistently reflect the low prevalence of such conditions, the limited availability of effective treatments, and the pressing need for targeted research and regulatory support. As a result of their rarity and low commercial potential, rare diseases have historically represented an area of market failure, where investment and research have been limited and often neglected. However, since the 1990s, each country has guaranteed continuous support to research and development projects to promote the advancements of rare disease treatments, achieving a growth rate greater than that of the entire pharmaceutical industry. In this review, we examine the status of orphan drug development using an advanced therapy medicinal product (ATMP) approach in the growing rare disease market, with a particular focus on cell therapies and gene therapies, which constitute the most actively developed and clinically applied categories within ATMPs. We also explore strategic approaches through which the orphan drug industry can utilize ATMPs, especially these two modalities, to enhance its competitiveness.
Rare diseases generally refer to diseases that have a small prevalence or are difficult to diagnose and treat (1). In 2025, approximately 5,500 rare diseases are registered in the WHO’s International Classification of Diseases 11th Revision, and it is estimated that there are about 8,000 rare diseases including cases with reported specific symptoms (2-5).
Advances in technology continue to discover new rare diseases (6). The definition of rare diseases varies, but ge-nerally the number of patients (prevalent population) is used, and additional regulations related to the profitability of the treatment or the quality of life of the patients are sometimes applied.
The definitions of rare diseases by country are as the United States defines a disease as having 200,000 or fewer patients, Japan as having 50,000 or fewer patients, Taiwan as having 10,000 or fewer patients, Australia as having 2,000 or fewer patients, and Korea as having 20,000 or fewer patients, although the exact prevalence is often unknown due to the difficulty of diagnosis. The European Union (EU) defines a disease as having 5 or fewer cases per 10,000 people, based on prevalence rather than number of patients (Table 1) (7-10). Beyond epidemiological thresholds, rare diseases are typically characterized by three core pathological low prevalence (rarity), high severity, and the absence of alternative therapeutic options (11). These conditions are often life-threatening or chronically debilitating, significantly reducing patients’ quality of life through persistent physical impairment, emotional distress, and social isolation. The severity of these diseases frequently results in premature mortality and long-term disability, underscoring the urgency of developing effective therapies. However, due to their limited patient populations, rare diseases present a classic case of market the low commercial return on investment deters pharmaceutical companies from engaging in research and development (12-14).
Due to the above characteristics, suppliers have no choice but to set high treatment costs per patient to reflect the value of their R&D investment because it is very challenging to conduct randomized controlled trials for rare diseases. Furthermore, clinical evidence may be insufficient compared to that of other drugs at the time of product launch. In addition, many rare disease patients suffer severe physical damage, decreased quality of life, and shortened life spans (severity of the disease). Therefore, the development of appropriate treatments is urgent. However, most rare disease treatments have no alternative treatments; this is the case for 40% of rare disease treatments approved in Europe (15-17).
Treatments for these rare diseases were considered a market failure area where active research, development, and investment were not made because despite the high unmet medical needs and necessity, the prevalence of patients was low and profitability was not guaranteed, being even called orphan drugs (18). However, thanks to various incentive systems such as public health policies and market exclusivity in each country, country, the orphan drug market has emerged since 2020 as an attractive niche where pharmaceutical companies can secure new pipelines (19, 20).
As of December 31, 2022, The Federal Drug Agency’s Office of Orphan Products Development had granted 6,340 orphan drug designations that represented 1,079 diseases.
From 1983 to 2022, there were 1,122 total approvals (in-cluding new molecules, indications, and formulations) of orphan-designated products. There were 882 initial approvals (first approval falling under one orphan designation) representing 392 rare diseases. Fourteen percent of designations resulted in at least one orphan drug approval.
The number of both designations and approvals has increased, with nearly seven times as many designations in the most recent decade (2013∼2022) as compared to the first decade after the Orphan Drug Act (ODA) was enacted (1983∼1992), and six times the number of initial approvals over the same period (21). Overall, orphan drug designations and approvals have surged several‑fold over time—particularly in oncology, neurology, and pediatric-onset diseases—underscoring the rapidly expanding rare disease drug pipeline in the 2020s (22). The reason for the orphan drug market growing rapidly is because Big Pharma’s are actively developing and selling orphan drugs (23) because it is presumed that rare drugs are relatively ‘low risk, high return’ items (24).
According to literature reported in 2019, the success rate from clinical phase 1 to approval of orphan drugs was approximately three times higher than that of general drugs, whereas the average cost of clinical development was approximately half (25, 26). This means that from the perspective of pharmaceutical companies, they can reduce project risk by reducing costs and increasing the success rate when developing new drugs for rare diseases. As such, orphan drugs are emerging as a mainstream focus in global new drug development, with a steadily increasing proportion of both synthetic drugs and advanced biopharma-ceuticals such as gene therapies, cell therapies, and tissue-engineered products (27). These advanced biopharmaceu-ticals fall under the regulatory classification of advanced therapy medicinal products (ATMPs), which are defined by the European Medicines Agency (EMA) as medicinal products based on genes, cells, or tissue engineering that offer novel therapeutic approaches for conditions with high unmet medical needs. ATMPs represent a convergence of biotechnology and regenerative medicine and are particularly prominent in the development of treatments for rare and severe diseases (28, 29).
Therefore, this review paper examines the laws and development trends related to rare global orphan drugs and analyzes the status of rare drug development using advanced biopharmaceuticals to identify ways to strengthen their competitiveness in the rare drug development industry.
To encourage pharmaceutical companies to develop orphan drugs, regulatory agencies in each country have been formulating relevant policies. In the United States, the ODA was enacted in 1983 to encourage development by granting pharmaceutical companies working on orphan drugs various benefits, including exclusive sales rights. Japan followed in 1993, and the EU in 2000. Korea also enacted the Rare Disease Management Act in 2015 (30, 31). Many regulatory agencies designate drugs as orphan drugs from the development stage, providing benefits during development and post-development sales (32).
For drugs designated as orphan drugs, financial benefits such as direct support for development costs, tax deduc-tions for development costs, and reductions in approval review fees are provided during the development process. In addition, the law has been enacted to enable reducing the development time through the expedited review program (33).
To expedite the development of new drugs for serious or life-threatening diseases and to enhance efficiency and rationality in the approval and review process, the U.S. Food and Drug Administration (FDA) implemented the Fast Track designation in 1988, followed by the intro-duction of other expedited programs such as Accelerated Approval and Priority Review in 1992, and Breakthrough Therapy Designation in 2012. In addition, the Regenerative Medicine Advanced Therapy (RMAT) designation was established under the 21st Century Cures Act of 2016, specifically for regenerative medicine products—including cell and gene therapies—that are intended to treat serious conditions and demonstrate preliminary clinical evidence indicating the potential to address unmet medical needs. RMAT provides sponsors with benefits similar to those of Breakthrough Therapy Designation, including intensive FDA guidance on efficient drug development and eligibility for priority review and accelerated approval pathways (34).
In the case of the EU, an emergency approval system is in place to allow for urgent marketing approval and limited use even with insufficient data on safety and efficacy, and the rarity of the disease is used as a requirement for receiving emergency approval (8).
Japan also provides consulting services for all stages of R&D and grants regulatory privileges, such as fast-track review services and extended reexamination periods (from 6 to 10 years) (35).
Korea also provides regulatory privileges such as exemption from review (i.e., waiving certain evaluation steps for qualified orphan drugs), Drug Master File registration exemption (i.e., allowing some manufacturers to bypass the requirement to submit detailed chemical and manufacturing information), and extension of the product license expiration period from 5 to 10 years (i.e., prolonging the post-market surveillance or re-examination period during which safety and efficacy are monitored) (32).
Taiwan also implemented a special drug registration review and approval pathway via the TFDA, launching an Orphan Drug Recognition and Expedited Registration Pilot Program in July 2023 to accelerate registration and approval of rare drugs—including new drug approvals and drug registration procedures (36).
Although China does not have a specific orphan drug review procedure, in October 2018, it has a special pathway to ensure that rare disease products approved overseas are given conditional approval by the National Medical Products Administration, allowing the drug to be laun-ched before manufacturers are required to complete final-phase clinical trials in China and on Chinese patients (37). In 2020, this was further formalized through the Provisions for Drug Registration, which set the technical review time for such drugs at 70 days (38).
Market exclusivity granted to orphan drugs with marketing approval in countries leading in the development of orphan drugs, such as the United States, the EU, and Japan, is a powerful incentive system that promotes development (39).
In Korea, when a rare disease drug that has undergone clinical trials is designated as a subject of re-examination, it is granted market exclusivity, and support is provided to ensure that no other drug for the same disease is approved for four years from the date of marketing approval (40, 41).
Countries that grant market exclusivity for orphan drugs, such as the United States and EU, can revoke market exclusivity if the supply of orphan drugs is not sufficient to meet demand, to secure supply stability (Table 2) (42).
As policy support for research and development increases, orphan drugs, which were once considered typical market failure areas, are now expected to become an area where new drug development is actively taking place, and the market is expected to continue to expand (43).
The global orphan drug market size in 2023 is projected to reach 345.8 billion in 2028, at an average annual growth rate of 10.8% over the next five years. The global orphan drug market size in 2023 is projected to reach 345.8 billion in 2028, at an average annual growth rate of 10.8% over the next five years (44).
By analyzing the sales by product type of the global orphan drug market, biopharmaceuticals are expected to grow from USD 85.88 billion in 2023 to USD 192.1 billion in 2028 (compound annual growth rate [CAGR] 17.5%), and chemical pharmaceuticals are expected to grow from USD 120.94 billion in 2023 to USD 153.77 billion in 2028 (CAGR 4.9%) (45).
Major countries are conducting government-led research, with the United States led by the National Insti-tute of Health, Europe led by the European Commission, and Japan led by the Agency for Medical Research and Development. The United States is supporting clinical research and joint research through the Rare Diseases Clinical Research Network, and is carrying out the Rare Diseases Registry program to standardize, integrate, and share patient registry data for the development of rare disease treatments, and the Therapeutics Rare and Neglected Disease program to support preclinical testing of therapeutic candidates for the development of treatments for rare or neglected diseases with the goal of developing new drugs. The EU has invested 1 billion euros in approximately 200 projects related to rare diseases through the EU 7th Framework Programme for Research and Horizon 2020, and is mainly covering most areas of medicine as research projects to develop new diagnostic tools or treatment methods for rare diseases (46, 47).
In 2024, FDA’s Center for Biologics Evaluation and Research (CBER) approved a record 17 biologic products—including gene therapies and vaccines—of which 10 received orphan drug designation. This contributed to a total of 72 new drug approvals by FDA in 2023, with 38 designated as orphan drugs, and in 2024, orphan drugs maintained a majority, with 26 of the 50 novel drugs (52%) approved by FDA’s Center for Drug Evaluation and Re-search carrying orphan designations. Concurrently, the FDA’s CBER also approved 17 biologics, including gene therapies and vaccines; 10 of these were orphan-designated, underscoring the pivotal role of advanced biologic modalities in rare disease treatment. Similarly, EMA’s Com-mittee for Medicinal Products for Human Use issued 90 positive opinions in 2024, of which 16 were for orphan medicines, with five orphan recommendations recorded in December alone (Fig. 1) (48-52).
Additionally, according to FDA data for 2024, the proportion of biopharmaceuticals in orphan drugs approved from the 1990s, when the ODA came into effect, to the 2020s, has been continuously increasing. Moreover, considering that approximately 30%∼40% of new drugs approved by the United States FDA during the same period (1994∼2024) were biopharmaceuticals, it can be confir-med that the proportion of ATMPs in the development of orphan drugs is high. The proportion of biopharmaceu-ticals and advanced pharmaceuticals in research and develop-ment of rare diseases is increasing due to the influence of next-generation genetic sequencing and CRISPR-Cas9 (a genome editing platform derived from bacterial adaptive immune systems, enables precise and permanent correction of genetic mutations at the DNA level) gene editing (53-55).
ATMPs such as immunotherapy, stem cell therapy, gene therapy, RNA interference (RNAi, RNAi utilizes small interfering RNAs to selectively degrade target messenger RNA [mRNA], thereby silencing the expression of disease-causing genes) and antisense oligonucleotides (short, synthetic, single-stranded DNA or RNA molecules that bind to specific mRNA sequences to modulate splicing, inhibit translation, or promote degradation via RNase H-mediated cleavage) are in the spotlight as orphan drugs (56, 57).
According to 2018 data investigated using CenterWatch data, 33% (92/283) of the advanced biopharmaceutical pipe-line in clinical trials are being developed as orphan drugs, which is a higher than the approximately 25% (657/2,663) of synthetic drugs in clinical trials being developed as orphan drugs. In addition, expanding the market through additional indications after orphan drugs is one of the main strategies for drug development (8, 58). Approxi-mately 26% of drugs initially approved as orphan drugs by the FDA from 1983 to 2016 received additional marketing approval as treatments for other orphan or non-orphan indications other than the approved orphan indication (22, 59).
While orphan drug exclusivity policies have played a pivotal role in promoting the development of treatments for rare diseases, they have also given rise to several unintended negative consequences. Across various jurisdictions—including the United States, EU, and Japan—market exclusivity provisions, typically ranging from 7 to 10 years, grant spo-nsors temporary monopolies that can significantly limit competition. This often leads to excessive pricing, as manufacturers leverage their exclusive status to set high prices without the moderating influence of generic or biosimilar entry, thereby imposing substantial financial burdens on healthcare systems and patients (60, 61).
Furthermore, some pharmaceutical companies have been criticized for strategically exploiting orphan designation by pursuing multiple rare indications with only marginal variations, or by extending exclusivity through incremen-tal modifications and secondary patents—a practice commonly referred to as “evergreening.” These strategies can create barriers to entry for alternative treatments, potentially delaying or preventing access to more effective or affordable therapies. The exclusive protections may also reduce incentives for further innovation once initial market entry is secured, leading to stagnation in research and development within certain rare disease domains (62, 63).
Additionally, the fragmented regulatory frameworks and incentives across countries may result in regulatory arbitrage, whereby sponsors seek orphan designation in regions offering more favorable exclusivity conditions, rather than based on actual patient needs. In this context, there are growing concerns—both within and outside the FDA—that such strategic use of the orphan drug policy deviates from its original intent to promote innovation for underserved populations. These developments underscore the need for ongoing scrutiny of regulatory trends and more coordinated international policy approaches to ensure that orphan drug frameworks remain equitable, sustainable, and truly patient-centered (42, 64-66).
As mentioned before, rare diseases are increasingly considered a public health priority in many countries. Rare disease legislation has been enacted to offset potential losses from developing drugs in these niche markets, including non-financial and financial incentives for pharmaceutical companies, national rare disease initiatives, and accelerated market authorization programs (67). Following this strategy, more than 600 orphan drugs had been approved globally by 2017, reflecting the policy’s success in stimulating drug development for rare diseases (68).
In recent years (2021∼2024), the orphan drug development market has continued to grow rapidly, driven by advances in biotechnology and increased regulatory incentives. Notably, the proportion of ATMPs—including gene therapies, cell-based treatments, and nucleic acid-based drugs—under development for rare indications has significantly increased. According to a 2024 pipeline analysis, over 40% of investigational ATMPs in late-phase trials target orphan indications, highlighting their central role in the future landscape of rare disease treatment (69, 70). Advanced biopharmaceuticals refer to therapeutics including cell the-rapy, gene therapy, and tissue engineering, and are being developed to solve the unmet medical needs of rare and incurable diseases and find better new treatments (71).
The demand for developing rare drugs using advanced biopharmaceuticals is increasing because approximately 80% of rare diseases have genetic components (72). Tech-nological advances in advanced biopharmaceuticals have increased the possibility of treating rare and genetic diseases that were previously considered incurable (73).
Additionally, ATMPs that address a high unmet clinical need, such as orphan drugs, have a high potential for an accelerated market approval pathway (74). To facilitate market approval of these innovative therapies, separate regulatory programs for ATMPs have been established in several countries (75).
In the case of the United States, there are fast track, breakthrough therapy, accelerated approval, and priority review, which can be applied to both pharmaceuticals and ATMP, as well as RMAT, which has recently been applied only to ATMP. In the case of the EU, there are accelerated assessment, conditional marketing authorization, marketing authorization under exceptional circumstances, and PRIME: priority medicines, which can be applied equally to both pharmaceuticals and advanced biopharmaceuticals (76). In Japan, there are priority review, conditional early approval, and Sakigake (introduced by the Ministry of Health, Labour and Welfare [MHLW], is intended to promote the early practical application of innovative medical products originating in Japan by providing prioritized consultation and accelerate review), which can be applied to both pharmaceuticals and ATMP, as well as conditional and time limited approval, which only apply to ATMP (35, 77). South Korea’s expedited processing system applies separately to pharmaceuticals and ATMP; the expedited processing system for advanced biopharmaceuticals is applied only to advanced biopharmaceuticals in accordance with Articles 36, 37, and 38 of the Act on Safety and Support of Advanced Regenerative Medicine and Advanced Therapy Medicinal Products, and includes customized review, priority review, and conditional approval.
In addition to the fast-track system applicable to pharmaceuticals (fast track, breakthrough therapy, accelerated approval, priority review), ATMP in the United States can utilize both systems in parallel if they are designated as RMAT. In the case of the EU, through the PRIME system, it is possible to receive active support from a multidisci-plinary expert group during the development process and receive multi-faceted reviews of issues related to the development of ATMP. In Japan, if the Sakigake designation is received, a concierge is provided who can contact and coordinate with the MHLW and Pharmaceuticals and Medical Devices Agency (PMDA) designated by the PMDA (Table 3) (78).
As such, collaborating with regulatory agencies during the development process to clearly define development targets and review safety and efficacy from various angles is advantageous, advanced biopharmaceuticals can be provided to patients more quickly, and thus the demand for developing rare drugs using ATMP is increasing.
In the following sections, we focus specifically on cell therapies and gene therapies—two major categories within ATMPs that have demonstrated the most clinical progress and therapeutic potential in the treatment of rare diseases.
ATMPs have been innovative tools in the field of regenerative medicine over the past years, while stem cell and gene therapy offer valuable therapeutics for treating a various diseases and offer significant advantages in tissue repair capacity due to autologous transplantation, safety in the surrounding environment, and absence of teratoma formation (79).
The ATMP sector is evolving rapidly, and new products have already demonstrated the ability to reverse or significantly delay the progression of disease. Recently, the advent of cell and gene therapies has shown the possibility of providing transformative and potentially curative outcomes for a diverse range of diseases and injuries (Fig. 2) (80). Among ATMPs, research on gene therapy and cell-based therapy is the most active, and clinical studies are being conducted on various disease models (81).
At the end of 2022, there were 26 cell and gene therapies approved in the United States by the FDA. In 2023, an additional 7 cell and gene therapies were approved bringing the total number to 33 approved therapies (50).
As of 2023, there are an estimated 1,687 clinical trials that are on-going and 2,760 developers. Of the 2,760 developers, 1,235 are based in North America, 888 Asia Pacific, and 543 are based in Europe. Of the current active clinical trials, 917 trials are in North America, 648 in the Asia Pacific region, and 329 in Europe (82).
As clinical research on various diseases is actively being conducted using ATMP, clinical research on rare diseases is also continuously being conducted. According to the National Institutes of Health Clinical Trials Database (http://clinicaltrials.gov), from 1998 to the present, 29 clinical trials using gene therapy and stem cell therapy for rare and intractable diseases have been conducted to treat various pathologies; Table 4 list details on clinical trials for gene therapy and stem cell therapy for rare diseases.
Of the 17 cases that underwent clinical trials with gene therapy, 16 cases were clinical trials for familial or hereditary diseases, and one case was cancer related. In addition, most studies used adenovirus to conduct clinical trials. In the case of clinical trials using cell therapy, in addition to 3 cases of neurological diseases (progressive supranuclear palsy, neurodegenerative disorders, Gaucher’s disease), 3 cases of autoimmune diseases (refractory autoimmune disorders, life-threatening autoimmune diseases, systemic lupus erythematosus), and 2 cases of hereditary diseases (Gaucher’s disease, Fanconi’s anemia) were treated. Clinical trials were conducted for various indications such as chronic kidney disease, rare cancers, and bone marrow-related diseases.
Most stem cell studies were conducted using stem cell transplantation, and studies were also conducted on concurrent treatment with existing drugs. Additionally, we were able to confirm that an advanced platform that includes stem cell genetic modification, which combines both gene therapy and stem cell therapy, is also in progress.
There are several limitations to developing treatments for rare diseases using cell and gene therapies. Some are listed below (11, 83-87).
Recruiting sufficient patients with rare genetic diseases to participate in clinical trials can be difficult because their number is small, and the diseases may be geographically dispersed (88).
Many rare diseases lack suitable animal models, making it challenging to conduct preclinical studies and evaluate the safety and efficacy of potential treatments (89).
Due to their rarity, these diseases are not unknown to medical professionals, and it is difficult to receive an accurate diagnosis, making recruiting enough patients with rare diseases to participate in clinical trials challenging (90).
Gene therapies face additional scientific and technical challenges, such as the risk of off-target effects that may result in unintended genetic modifications, which could lead to adverse outcomes. Furthermore, the use of viral vectors, particularly adeno-associated viruses and lentiviruses, introduces concerns about immunogenicity, which may reduce treatment efficacy or cause immune-related complications. Manufacturing consistency and vector delivery efficiency also remain significant hurdles, especially for systemic or central nervous system targets (91).
As mentioned above, rare diseases affect only a small number of people, hence the market for orphan drugs is limited. Therefore, pharmaceutical companies have less financial incentive to invest in developing these drugs, and R&D costs must be spread across a smaller patient population, resulting in higher drug prices. In addition to the reasons mentioned above, there are many other factors that increase the price of rare diseases. Some rare diseases are chronic and require long-term treatment, which may require patients to take drugs for years, increase the cost of treatment, and special storage and distribution requirements may increase the cost. In addition, some insurance companies and government health care programs do not cover the cost of orphan drugs, which may increase the price and make it problematic for patients to access them (92).
Although cell and gene therapies offer novel clinical promises for treating rare diseases through their unique mechanisms of action, their development remains challen-ging. First, the available of technology. In the case of rare diseases, autologous therapies, which are tailored to each individual patient, are often employed due to the lack of broadly applicable treatment platforms (93). However, in the case of these autologous therapies, complex logistics, long waiting times, and product efficacy are high barriers to patient access (94). To improve these shortcomings, it is thought that developing allogeneic products will improve the complex manufacturing logistics and inconvenience caused by hospitalization administration (95).
The second is quality assurance. Cell and gene therapies can be invasive due to the nature of the product and may require specialized equipment to be placed in the body, which can raise quality assurance issues related to the administration process. The gold standard of controlled randomized clinical trials may not be feasible or ethically justified for all indications, especially for life-threatening diseases where there is no satisfactory standard of care. For example, approval of a trial that requires surgery to administer an advanced product is very difficult and requires strong justification. For this reason, these innovative treatments, which are subject to many uncertain-ties, may be difficult for physicians to recommend to their patients, preventing them from receiving appropriate treatment. Therefore, robust quality assurance for cell and gene therapies must be in place (96, 97).
Finally, patient engagement and assurance of clinical benefits. Collaboration involving all relevant stakeholders is paramount to orphan cell and gene therapies (98). Once cell and gene therapies are approved, it is important for manufacturers and suppliers to standardize processes to reduce complexity in hospitals that can become overwhel-med by managing multiple training programs and management protocols (99). Additionally, strategies are needed to facilitate clinical adoption so that cell and gene therapies can be integrated into the care delivery/patient pathway as easily as possible. Clinicians will also likely need ongoing support to ensure that health claims for patient care are collected correctly and efficiently to meet the data requirements of public and private health insurers (95).
It has been confirmed that the proportion of rare drug development using cell and gene therapy is increasing. However, considering that domestic rare drug research is led by small and medium-sized venture companies and most of them are still in the clinical phase 1 stage, it is necessary to encourage research and development through R&D support and tax deduction system centered on clinical trial costs specialized for rare drugs. In addition, finding areas where markets can be preempted with treatments that are not currently being developed, and conducting research in markets where marketability and profit generation are guaranteed after development, will facilitate developing more competitive treatments.