- Drug approvals in 2021 continued at a pace consistent with prior years, but a large backlog of inspections is slowing some approvals.
- Cell and gene therapies investment is growing rapidly and promises substantial revenue growth in the coming years.
2021 FDA approvals and a look forward
New drug approvals of conventional drugs and biologics were down slightly in 2021 but within the range of recent years, continuing the trend of over 50 each year.
The mix continues to slowly shift toward biologics, with 37% of new drugs approved under biologics license applications (BLAs) compared to 34% in 2020. Last year also continued the trend of orphan drugs making up a large percentage of approvals, at 49%, down slightly from 53% in 2020. Of all approved drugs in 2021, 28% were oncology drugs, 13% were immunomodulators and nearly 12% were anti-infectives (primarily antivirals and vaccines).
What makes a drug an “orphan” under the Orphan Drug Act?
It’s important to first understand what is meant by a rare disease—one that affects fewer than 200,000 people in the United States. Although each rare disease is uncommon, there are over 7,000 such diseases, and more than 30 million Americans are affected by one.
An orphan drug targets a rare disease that has no effective treatments available. The Orphan Drug Act is designed to incentivize companies to develop treatments for rare diseases by offering tax credits, fee waivers and exclusivity to approved drugs.
Looking ahead to approvals in 2022, the FDA is currently working through a significant backlog in applications. According to a report from the FDA, as of Sept. 30, 2021 (the most recent data available), 52 new drug applications (NDAs)—but zero BLAs—were delayed as they await FDA inspections. Although the FDA has prioritized these inspections, given the current state of the pandemic globally, it is unclear how quickly this backlog will be resolved.
In addition to this backlog, the FDA must handle a substantial number of Prescription Drug User Fee Act (PDUFA) reviews in 2022. Based on data from Evaluate Pharma, currently 43 NDA and BLA applications have a PDUFA date set this year. Although not all the nearly 100 drugs that have applications pending with the FDA will be approved, this does indicate we should expect the volume of drug approvals in 2022 to be similar to volume in recent years.
Investments in cell and gene therapy outpace approvals
Cell and gene therapies frequently make news because they promise to cure or treat diseases that were once thought incurable, the approved drugs are often expensive, and the companies developing them often garner substantial investment. As of January 2022, only 14 unique cell or gene therapies were approved by the FDA, along with eight human cord blood-based treatments. In total, these treatments make up only 6% of 340 total biologics approved by the FDA.
Despite the small number of approved drugs, cell and gene therapy companies attract a growing amount and proportion of private investment. Although all private investment in life sciences has grown substantially over the past 10 years, its rapid growth in cell and gene therapy companies is remarkable. Overall, private equity and venture capital investment saw a compound average growth rate of 18% from 2010 through 2021 for life sciences. For gene therapy, the average growth rate over that period was 59%, and for cell therapy it was 63%. From 2020 to 2021 alone, investment grew from $362 million to nearly $68 billion.
Given the few cell and gene therapies currently on the market, it is natural to ask what is driving this rapid increase in investment. Examining worldwide sales forecasts from Evaluate Pharma for all drugs through 2026 (both approved drugs and drugs currently in the pipeline), the answer becomes clearer.
Conventional (non-biologic) drug sales are forecast to grow from $465 billion in 2021 to $620 billion in 2026, a compound average growth rate of 6%. Biologics, excluding cell and gene therapies, are forecast to grow at a compound rate of 5%, from $415 billion to $541 billion over that same period. Cell and gene therapies, on the other hand, are expected to grow from $4 billion today to $45 billion over this period, a compound average growth rate of 63%.
In addition, since cell and gene therapies are often viewed as important in future drug development, these companies will become attractive acquisition targets as they advance their therapies. For example, in 2019 Roche acquired Spark Therapeutics for $4.8 billion. This was a 122% premium over the stock price at the time of the announcement and was driven by the fact that Spark has one of only two approved gene therapies currently on the market.
Although the growth in dollars for conventional drugs and biologics that exclude cell and gene therapies is much higher than for cell and gene therapies, this rapid growth forecast indicates that the latter technologies are on the cusp of coming into their own, bringing new treatments to market and providing substantial returns to their investors.