Increasing Orphan Drug Loss in Japan: Trends and R&D Strategy for Rare Diseases

Approximately 7000 rare diseases have been identified globally; however, effective treatments are available for only 5% of them, highlighting substantial unmet medical needs worldwide. In Japan, drug loss-the lack of domestic approval or development of drugs already approved overseas-has become a pressing public health issue. We analyzed orphan drugs (ODs) approved in the United States (U.S.) between 2005 and 2021 to examine trends in OD development in the U.S., drug loss and associated research and development (R&D) models, with the aim of identifying factors that could facilitate more seamless OD development in Japan. Despite a marked increase in OD approvals in the U.S. since 2018, the number of ODs not approved in Japan have increased rapidly, reaching 120 drugs (49%), of which approximately 70% had not entered development, indicating greater OD loss in Japan. U.S./Europe-based startups have become key players in rare disease drug R&D, significantly contributing to this drug loss trend. They successfully develop drugs in the U.S. by combining in-licensing with in-house drug discovery. Out-licensing to Japanese companies or large pharma is critical for expansion into Japan, with successes attributed to drug innovation, target indications, and transactional capabilities. Underlying this trend were Japan's perceived low market potential, its complex clinical trial environment and regulatory requirements, and the financial limitations of startups. These findings highlight the need to foster partnerships with startups and cultivate an ecosystem in Japan that nurtures local startups, to address drug loss and ensure access to promising drugs.