Alexion Pharmaceuticals announced this week it is buying Synageva Biopharma for $8.4 billion. Alexion develops so-called orphan drugs, treatments for rare diseases. In the U.S., rare diseases, most of them genetic, affect about 30 million people.
If you're in the business of making drugs, you need people to sell them to. Even though the pool of people needing these treatments is smaller, the payoff is huge if you're a rare disease drug company, says Adam Feuerstein. He's senior columnist covering biotech at The Street.
"When you're charging $500,000 a year, that adds up." Feuerstein says. That's per patient. He says that's the main reason we're seeing all these mergers and acquisitions lately in biopharma. "There are just relatively few drugs being developed that can generate hundreds of millions and billions in dollars in sales."
Pete Mooney tracks the biotech industry for Deloitte. "So it does a very strong social good as well," Mooney adds. He says also, governments have made this market lucrative, and they've removed lots of the roadblocks regular pharmaceutical companies face. So drugs get to market faster, and help people in need.
But, Mooney says, as always, companies have to balance the cost of developing these treatments with how affordable they'll be for patients.