UPDATED: Charmed by orphan drugs, suitors line up for ViroPharma

While the U.S. drug market may be shrinking, specialty drugs are on the up-and-up--and drugmakers are taking note. Orphan drugs for rare diseases are hot commodities, and reported takeover interest in specialty producer ViroPharma shows that so, too, are their makers.

According to three unidentified Reuters sources, the Exton, PA-based biotech is a potential acquisition target. Although ViroPharma ($VPHM) has not pursued a sale, its rare-disease-drug pipeline has attracted "several" potential buyers, the news service says. Its lead drug, Cinryze, treats hereditary angioedema, a genetic disease affecting an estimated 6,000 people in the U.S.

ViroPharma itself has not come out with a comment on the matter, and Reuters' sources say no deal is imminent. But it's easy to see why larger drug companies might be exhibiting preliminary interest in the company. Recently, pharmacy benefits manager Express Scripts forecasted growth in the specialty drugs sector to reach 40% by 2014 and 67% by 2015. That's a beacon of hope for companies frustrated by market stagnation in the U.S. and Europe. As if that sales promise wasn't enough, FDA incentives are helping to speed specialty meds to market. They're also more difficult to copy and can command high prices--in some cases, very high. ViroPharma's Cinryze itself costs $350,000 per year, according to Forbes.

These factors have left some Big Pharma companies looking to cash in on orphan drugs through M&A, but ViroPharma, like Cinryze, won't come cheap, Reuters says. Shares of the company, whose market cap is $1.8 billion, are up more than 20% over the past year. Cinryze sales accounted for 76% of ViroPharma's $427.9 million in 2012 revenue, Bloomberg reports. But those revenues may soon be expanding. Last week, Reuters says, the company's maribavir drug, already designated as an orphan drug in the U.S., also received the designation in Europe. The treatment, designed to treat patients with a specific type of herpes and impaired cell mediated immunity, is guaranteed 10 years of potential market exclusivity if it is approved for marketing in the EU.

- read the Reuters story
- get more from Bloomberg

Editor's Note: This article has been updated  to reflect that Express Scripts' forecast applies to all specialty drugs rather than just orphan drugs, a subset of specialty drugs.

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