Healthcare

Bridging the Investment Gap in Rare Diseases

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September 24, 2025, 09:13

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More than nine out 10 rare diseases lack treatments or cures. Private investors and nonprofits play a key role in speeding development of the drugs patients need.

TL;DR

An estimated 400m people suffer from rare diseases, most of which have no treatment or cure.

Over the past four decades, scientists have made remarkable progress in combating a range of devastating rare diseases. Millions of patients around the world, however, are still waiting for a treatment or cure.

While rare diseases collectively impact as many as 400m patients, individually they afflict fewer than one in 2,000 people. Those small populations make it difficult to find patients for clinical trials and can limit the commercial potential for novel treatments. Since the U.S. passed a law in 1983 giving companies incentives to pursue medicines for rare diseases, hundreds of drugs have been approved. But developers continue to face high costs and long timelines in their search for thousands of additional therapies that patients need.

“There are no shortcuts in drug development, though regulators have shown flexibility in certain cases to help accelerate treatments in particularly severe and ultra-rare diseases,” says Christoph Broja, a partner on EQT’s life sciences team.

As the industry’s focus shifts to opportunities such as treating obesity that are seen as more lucrative, private investors and nonprofits play a critical role in helping developers push ahead with potential breakthroughs and address the huge unmet need. Fewer than 10 percent of an estimated 10,000 known rare diseases have approved medicines.

“Private capital can help fill this gap,” says Broja, whose team backed Amolyt Pharma for five years leading up to its sale to AstraZeneca in 2024 and Pharvaris on the road to its IPO in 2021. “Groups that combine firepower and commercial acumen with scientific and technical knowledge are uniquely positioned to advance these companies.”

Source: Global Genes

With patents on dozens of blockbuster therapies set to expire, allowing generic drugmakers to begin selling cheaper versions, pharma companies are racing to offset the loss of more than $400bn in revenue by 2033. That’s driving them into booming sectors such as weight-loss medicines, a market that could reach $150bn within a decade.

Companies are now exploring the potential of weight-loss drugs in tackling other illnesses, from heart disease to Alzheimer’s, and hoping to widen the reach of cancer medicines, spurred by the success of the world’s top-selling drug, the immunotherapy Keytruda.

With rare diseases, it’s more complicated.

These treatments often target genetic conditions affecting small groups of people, with limited opportunity to expand into new territories. They also usually come with higher price tags — potentially ranging in the millions of dollars — to account for the high development costs and low numbers of patients. But health systems are taking a tougher stand in reimbursing companies, raising industry concerns.

Although rare diseases remain priorities for European biopharma companies like Sobi and Chiesi, they “often don‘t meet the high revenue targets set by larger pharma companies and therefore attract less investment from those groups,” Broja says.

After decades of expanding rare disease drug pipelines, declining returns on R&D investments and economic headwinds are forcing many developers to “rethink their strategies,” Ken Getz, executive director of the Tufts Center for the Study of Drug Development, wrote in Applied Clinical Trials in April.

“Sponsor companies remain passionate and committed to finding treatments and cures,” Getz wrote. “But awareness of development and commercialization realities has peaked.”

Wave of innovation

Philanthropic organizations are also supporting the effort to find new therapies and improve the lives of millions of patients. The Chan Zuckerberg Initiative, for instance, is helping to fund CRISPR-based editing technology, among other partnerships. Earlier this year, doctors for the first time treated a baby born with a rare genetic disorder with a CRISPR gene-editing therapy tailored to specifically repair his mutation.

EQT Foundation plans to award grants of as much as €100,000 to rare disease researchers with ambitious ideas that might have been overlooked by traditional investors. The foundation this month is reviewing proposals focusing on gene therapies and other novel technologies, as well as programs aimed at accelerating trials, reducing costs and widening access. With some patients waiting five years or more for a correct diagnosis, the foundation is also prioritizing early detection.

An array of other initiatives targeting rare diseases are advancing. A partnership between the University of Oxford in the U.K. and Harrington Discovery Institute in the U.S. aims to bring 40 drugs into clinical trials in the next 10 years, while the European Rare Diseases Research Alliance, with about €150m of European Union funding, brings together public and private organizations across the continent to drive innovation.

While rare diseases, many of which are chronic, progressive and life-threatening, burden millions of people, they also take a significant toll on families, caregivers and the economy.

“A wave of innovation in rare diseases is raising hopes for patient communities all over the world,” says Cilia Holmes Indahl, EQT Foundation’s chief executive officer. “But researchers need more support to make these potential breakthroughs a reality.”