FORTUNE — “We concentrate on devastating disorders that happen to be very rare,” says Alexion (ALXN) founder and CEO Leonard Bell. He launched the company in 1992 on the hunch that an obscure class of proteins could be engineered to treat immune-system ailments. Today Alexion sells just one product: Soliris, a so-called complement inhibitor drug that cost about $1 billion to develop and is used to treat PNH and aHUS, diseases of the blood and kidneys, respectively, that afflict no more than a few thousand patients worldwide. Soliris is one of the world’s most expensive medications, costing around $400,000 per patient per year. So far insurers haven’t balked at this lofty price, largely because Soliris is the only safe and effective treatment for the two diseases and because the total budget impact is small compared with the cost of treating more common afflictions like cancer. “The reimbursement climate is very favorable,” says Morningstar analyst Lauren Migliore.
HQ: Cheshire, Conn.
The business: Specialized pharma player; sells a drug used to treat two rare disorders
Risk Reward: Wall Street skews bullish on Alexion and its peers in the ultra-rare-disease market. With Pfizer (PFE) and other big pharma companies facing devastating revenue drops as blockbuster drugs like Lipitor go off patent, niche players like Alexion look good because of their monopoly pricing power. The company is exploring several promising new applications for Soliris, including rare kidney and neurological diseases. “Soliris is a drug pipeline in itself,” says S&P Capital IQ analyst Steven Silver. In an effort to reduce its dependence on Soliris, Alexion has also acquired several biotech startups in recent years.
Alexion has been a frequent subject of M&A chatter, most recently when Goldman Sachs identified it as a top biotech takeover target for 2012. Alexion officials say they plan to stay independent. Meanwhile, the major pharma companies are eyeing the ultra-rare-disease space hungrily, so Alexion’s monopoly may not last forever.
This story is from the September 3, 2012 issue of Fortune.