Genzyme (GENZ - commentary - Cramer's Take), for instance, recently received Food and Drug Administration approval for Myozyme, its drug to treat Pompe disease, a progressive muscle disorder that affects only 5,000 people in the U.S. According to the Cambridge, Mass.-based biotech, it has spent more than $500 million to date on developing and marketing the drug.

"The way we look at that is it's not so much the size of the market, but the therapeutic value of the drug," says Genzyme spokesman Dan Quinn.

Genzyme is an exception, however. The company is known for having built its business from the ground up on rare diseases, and 300 patients were on Myozyme in a matter of weeks after the drug's U.S. launch last month.

Using Genzyme as a role model, it looks like some smaller companies, such as BioMarin Pharmaceutical (BMRN - commentary - Cramer's Take), Nektar Therapeutics (NKTR - commentary - Cramer's Take) and Isis Pharmaceuticals (ISIS - commentary - Cramer's Take) are following in its footsteps, analysts say. Specialty-pharmaceutical player Shire (SHPGY - commentary - Cramer's Take) is also getting a piece of the market through its acquisition of rare-disease drugmaker Transkaryotic Therapeutics last year.

Nektar is developing a drug for rare fungal infections of the lungs. Rare metabolic disease treatments are expected from BioMarin, which is co-developing Aldurazyme with Genzyme, among other enzyme products. Isis Pharmaceuticals is also developing a treatment that's been granted orphan-drug status by the FDA for a rare genetic disease called homozygous familial hypercholesterolemia, which causes a severe elevation of cholesterol levels.