Institutional investors including Armistice Capital, RTW Investments, and Wellington Management have increased their exposure to rare disease therapeutics companies as the orphan drugs market sustains strong growth momentum. Multiple specialized healthcare funds and broad-market asset managers allocated significant capital to the sector in 2024 and continue to do so in 2025, driven by accelerated FDA approvals and collaboration deals demonstrating commercial potential for treatments targeting small patient populations.
The global rare disease treatment market value reached $224.30 billion in 2024, with some analysts projecting growth to $527 billion by 2034, a potential 8.92% compound annual growth rate. Meanwhile, sales of rare disease therapies are growing at a 12% CAGR, twice that of non-rare disease drugs, with orphan drugs potentially comprising 20% of all prescription sales by 2026 according to some estimates.
PTC Therapeutics Draws Concentrated Institutional Capital
PTC Therapeutics has become a focal point for institutional investment in rare disease therapeutics, attracting 510 institutional holders with combined ownership exceeding 87 million shares. The Warren, New Jersey-based company achieved multiple significant milestones in 2024, including four FDA approval applications submitted and a $2.9 billion collaboration with Novartis for its Huntington’s disease program PTC518.
PTC’s diversified pipeline spans Duchenne muscular dystrophy, phenylketonuria, and Friedreich’s ataxia, offering multiple regulatory catalysts for institutional evaluation.
RTW Investments owns 7.70% of PTC Therapeutics, while Wellington Management holds 10.18% ownership, representing 7.43 million shares of the rare genetic disorder specialist. Armistice Capital holds 5.43 million shares, placing the fund among the top-5 institutional holders.
Novartis delivered $1 billion upfront to PTC with potential for $1.9 billion in additional milestones, plus 40% profit sharing on U.S. sales and tiered international royalties. Major pharmaceutical companies increasingly seek exposure to orphan drug opportunities through such partnerships, validating institutional interest in the sector.
Franklin Resources holds 4.78% ownership with 3,490,000 shares, though the firm decreased its position by 28.06% during recent quarters. Vanguard Group and BlackRock maintain substantial index-driven positions, providing foundational institutional ownership typical of broad healthcare sector exposure.
Regulatory Progress
Since 2020, over half of all new drug approvals by the FDA’s Center for Drug Evaluation and Research annually have received orphan status, indicating the importance of rare disease therapeutics.The FDA approved more than half of novel drugs with orphan designation in 2023, reflecting prioritized attention to rare disease treatments.
PTC achieved FDA acceptance of four separate approval applications in 2024. Kebilidi gene therapy for AADC deficiency received approval in November 2024, while sepiapterin for phenylketonuria awaits FDA decision by 2025. Vatiquinone for Friedreich’s ataxia received priority review with an August 19, 2025 target action date.
Travere Therapeutics Attracts Diverse Institutional Participation
Travere Therapeutics has drawn institutional capital as its lead asset FILSPARI achieved full FDA approval for IgA nephropathy treatment. Major institutional participants include BlackRock, Janus Henderson Group, Vanguard Group, and Driehaus Capital Management alongside Armistice Capital and Wellington Management across its shareholder base.
Driehaus Capital Management made notable portfolio adjustments in 2024, adding over 1.9 million Travere shares for a 608% increase, bringing total holdings to 2.2 million shares valued at $38.6 million. Rock Springs Capital Management added 289,173 shares to reach nearly 5 million shares valued at $86.6 million, demonstrating sustained institutional interest in rare kidney disease therapeutics.
Supernus Pharmaceuticals, focused on neurological conditions including ADHD and Parkinson’s disease, reports institutional ownership across 582 entities. Major shareholders include BlackRock, Vanguard Group, and Armistice Capital.
Broader Market Dynamics
Orphan drugs benefit from significant regulatory incentives established through the Orphan Drug Act, including seven-year marketing exclusivity, tax credits for research costs, and expedited FDA review processes. These advantages, combined with limited competition and pricing flexibility, create attractive commercial dynamics for institutional investors.
Reduced competition, shorter FDA approval times, and market exclusivity have positioned orphan drugs among the fastest-growing categories in the global pharmaceutical industry.
Recent acquisition activity demonstrates value recognition, with Biogen acquiring Human Immunology Biosciences for up to $1.8 billion in May 2024 to strengthen its rare disease pipeline. AstraZeneca announced acquisition of Amolyt Pharma in March 2024 to expand its bone metabolism franchise with novel treatments for rare endocrine diseases.
Institutional investors evaluate rare disease companies based on regulatory expertise, commercial execution capabilities, and pipeline diversification. The sector’s growth trajectory reflects both increasing diagnosis of rare conditions and advancing therapeutic technologies, including promising developments in AI, that enable more cost-effective, targeted treatment of previously untreatable or difficult-to-treat diseases.
Sector Investment Characteristics and Outlook
Rare disease therapeutics present distinct investment characteristics that attract both specialized healthcare funds and broad-market institutional investors. While development risks remain significant, regulatory support, technology advancement, and commercial incentives can provide favorable conditions.
Institutional participation across companies like PTC Therapeutics, Travere Therapeutics, and Supernus Pharmaceuticals speaks to broader confidence in the sector’s ability to deliver both clinical value and commercial returns. Regulatory catalysts, partnerships, and growing market recognition continue attracting capital from diverse institutional sources.
