An orphan drug is a pharmaceutical agent that is used to treat a rare medical condition (viz., Huntington’s disease, myoclonus disease, Tourette syndrome etc.). They receive little attention from pharmaceutical companies as the small patient population could not justify the huge investment required for drug development. In the last 20 years, orphan drug act has been adopted in several countries around the world (USA, Japan, Australia, and the EU) and has successfully promoted R&D investments to develop new pharmaceutical products for the treatment of rare diseases, but it faces future challenges like returns on the huge R & D costs, funding sources and initiatives for development of orphan drugs.