Big Pharma's Focus on Obesity Drugs Opens Doors: Korean Orphan Drugs Secure Multiple FDA Designations

Three Companies Including Yuhan and ABL Bio Receive FDA Orphan Drug Designations This Month

Big Pharma's Focus on Blockbusters and Obesity Drugs Eases Competition

Seven-Year Exclusivity, Waived Review Fees Among Key Incentives

Orphan Drug Market Projected to Reach $409 Billion by 2032

Domestic bio companies in South Korea are increasingly receiving rare disease drug designations from the U.S. Food and Drug Administration (FDA). While multinational pharmaceutical companies are focusing on research and development of blockbuster new drugs such as obesity treatments to respond to the patent cliff, Korean pipelines are making rapid progress in the relatively less competitive field of orphan drugs.

According to the pharmaceutical and biotech industry on April 22, three domestic companies have received rare disease drug designations from the FDA so far this month. A notable example is 'YH35995,' which is being developed by Yuhan Corporation as a treatment for Gaucher disease. Gaucher disease is a hereditary rare lysosomal storage disorder caused by a deficiency of a specific enzyme, resulting in abnormal metabolic processes in the body. In particular, type 3 Gaucher disease is accompanied by neurological symptoms, and there are currently no approved treatments for these symptoms, resulting in significant unmet medical needs. YH35995 is an oral small-molecule compound that inhibits the production of glucosylceramide (GL1). In preclinical studies, it demonstrated the ability to cross the blood-brain barrier (BBB) and continuously inhibit GL1 in the brain, raising expectations for improvement in the neurological symptoms of type 3 Gaucher disease.

'Toveshimig,' a treatment for bile duct cancer developed by ABL Bio and out-licensed to its global partner Compass Therapeutics, has also been added to the list of designated drugs. Toveshimig is a bispecific antibody that simultaneously blocks the DLL4 and VEGF-A signaling pathways, which are involved in the formation of new blood vessels and intratumoral angiogenesis. Currently, phase 2 and 3 clinical trials are underway for patients receiving second-line treatment for bile duct cancer. If this new drug is commercialized, ABL Bio will receive milestone payments and royalties from sales. Excelamol, a biotech venture established in 2020, also secured designation for a pancreatic cancer treatment candidate targeting PD-L1. The mechanism involves selectively binding to PD-L1 expressed on tumor and immune cells, followed by releasing a potent antitumor agent, SN38, to induce cancer cell death.

The incentives offered by the FDA are a key reason why domestic companies are entering rare disease drug development. Receiving orphan drug designation provides a variety of development incentives, such as clinical trial tax credits and exemption from review fees, and guarantees up to seven years of market exclusivity after approval. Unlike the five-year exclusivity for standard new drugs, orphan drug exclusivity blocks the approval of competing drugs for the same indication regardless of patents, resulting in a significant first-mover advantage.

The trend of big pharma focusing elsewhere is seen as an opportunity for Korean companies. According to the industry, as the patents of blockbuster drugs expire sequentially through 2030, multinational pharmaceutical firms are facing a revenue gap of approximately 300 billion dollars (about 440 trillion won). Market research firm Evaluate highlighted that as big pharma turns to new blockbuster drugs such as obesity treatments to fill the patent gap, competitive pressure in the orphan drug market is relatively easing. The relatively smaller orphan drug market is structured so that first movers can easily dominate.

FDA orphan drug designation is also an advantage in technology export negotiations. To receive the designation, companies must demonstrate not only the rarity of the disease but also the validity of preclinical data, mechanism of action, and differentiation from existing treatments. The designation itself serves as a form of quality validation, increasing the likelihood that global big pharma will consider these candidates for technology transfer. The market itself is also expanding. According to Evaluate's recently released "2026 Orphan Drug Report," the rare disease drug market is projected to account for 21% of total prescription drug sales by 2032. This is up six percentage points from 15% in 2022, and the market size is expected to reach 409 billion dollars (about 600 trillion won).

An industry insider commented, "As the potential of new drugs is proven and incentives such as market exclusivity and financial support are provided, it is an unparalleled opportunity for companies. Given the rising competitiveness of Korean bio companies, the number of FDA orphan drug designations is expected to continue to increase."

This content was produced with the assistance of AI translation services.