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Inside Horizon’s Orphan and Rheumatology Business Unit

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Orphan drug business unit

Previously, Horizon Pharma (HZNP) was almost entirely in the primary care business, with only three drugs. However, multiple acquisitions drove it to expand its portfolio into orphan drugs and rheumatology, and now the company has a total of nine drugs under its umbrella.

The contribution from orphan drugs rose to 40% in 1Q16. The Orphan Drug segment is made up of three drugs: Actimmune, Ravicti, and Buphenyl. (For details on Actimmune, check out “Why Actimmune, Horizon’s Lead Orphan Product, Has Such Huge Potential.”)

Ravicti and Buphenyl were added after the acquisition of Hyperion Therapeutics in fiscal 2015. The drugs are indicated for urea cycle disorders.

In fiscal 2016, Wall Street analysts anticipate that Actimmune will record $125 million, while Ravicti and Buphenyl might earn $159.7 and $14.7 million, respectively.

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Rheumatology

This segment includes Rayos, or Lodotra, and the recently-added Krystexxa in its portfolio. Rayos competes with various drugs and biologics used to treat rheumatoid arthritis.

Competitors include steroids, traditional disease-modifying antirheumatic drugs such as methotrexate, and biologics such as AbbVie’s (ABBV) Humira, Amgen’s (AMGN) Enbrel, and Johnson & Johnson’s (JNJ) Remicade. Krystexxa is a drug in Horizon’s Rheumatology division and is highly effective orphan biologic medicine.

2016 revenue projections

In fiscal 2016, Wall Street analysts project that Rayos will fetch $47 million and that Lodotra will earn $4.8 million. (Outside the US, Rayos is known as Lodotra.) According to company guidance, Krystexxa should earn more than $80 million in fiscal 2016.

If you are a risk-averse investor who doesn’t want excessive company specific risks, you can invest in the iShares Nasdaq Biotechnology ETF (IBB), which has 0.46% of its holdings in Horizon.

In the next and final part, we’ll discuss analyst recommendations and price targets for Horizon.

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