BioMarin (NASDAQ:BMRN) taught big biotech companies a thing or two about making money this year.  Here are three lessons large competitors likely learned watching BioMarin succeed in treating rare and ultra-rare diseases in 2013.

1. You can make money treating rare diseases.
Big companies have historically ignored developing therapies for uncommon disease, deciding their small patient pools weren't large enough to move the needle on sales and profit. But BioMarin has carved out a successful franchise of drugs addressing the rarest of conditions.

The company's four commercialized drugs may not generate a lot of revenue individually, but combined they produced $137 million in third-quarter sales -- a run rate of over a half billion dollars in revenue a year.

BioMarin's best seller is Naglazyme, a drug used to treat Maroteaux-Lamy syndrome, or MPS VI -- an ultra rare lysosomal storage disease affecting just one in 250,000 to 600,000 newborns.

The MPS VI market may be too small for big companies, but it's the perfect size for BioMarin.  Naglazyme produced $63 million in third quarter sales thanks to long lasting orphan drug patent protection and a $365,000 a year price tag  

BioMarin's Kuvan similarly serves a small number of patients. The drug treats phenylketonuria, or PKU, a condition affecting just one in about every 10,000 Caucasians. Yet BioMarin still managed to generate $43 million in sales from the drug in the third quarter, nearly 20% more than a year ago.

The company collaborated with Sanofi's (NASDAQ:SNY) Genzyme unit to develop a third specialty drug, Aldurazyme. That enzyme replacement drug treats another lysosomal storage disease, MPS1, otherwise known as Hurler syndrome. MPS1 occurs in just 1 in 100,000 births and produced sales of $23 million for BioMarin in the third quarter.

And BioMarin's Firdapse, sold in the European Union for Lambert-Eaton myasthenic syndrome, or LEMS, addresses an autoimmune disorder most commonly associated with lung cancer. There are just 3.4 cases of LEMS per million people worldwide and sales of Firdapse totaled $4 million last quarter, 13.9% more than a year ago.

2. Imitation is the sincerest form of flattery
BioMarin's success has gotten the attention of plenty of people. Cheap money and strong equity markets are providing a torrent of financing for innovative developers tackling niche diseases.

Some of that financing is coming from the biggest players, such as Celgene (NASDAQ:CELG), who have stepped in to collaborate on rare diseases with a handful of companies including Acceleron and Epizyme. Both of those companies have won important orphan drug status for key compounds in development.

Money is also flowing from venture capitalists, who are increasingly hunting across academia and non-profits for promising orphan drug candidates. One of them is Cydan, an accelerator backed by private equity firm New Enterprise Associates and drug giant Pfizer.

And small biotechs are also finding a welcoming audience on Wall Street. Heading into late October, some 39 small-cap biotech stocks -- many focused on orphan drugs -- had issued IPOs -- raising a combined $3 billion from investors. That marks the best year for biotech IPOs since the turn of the millennium.

3. Buying successful orphan drug companies comes at a steep price.
BioMarin was one of the most rumored acquisition targets of 2013, with some of the biggest companies in the world, such as Roche and Sanofi, reportedly vying to buy it.

That helped push BioMarin's market cap to nearly $10 billion, or roughly 20 times annualized third quarter sales. But that jaw dropping valuation may not be as out of whack as it sounds. After all, Amgen (NASDAQ:AMGN) was willing to pay 17 times sales to acquire Onyx Pharmaceuticals and its two orphan drugs Kyprolis and Nexavar this past summer. Amgen was willing to pay the lofty price because Onyx's pipeline opportunity appeared to have a long runway thanks to Kyprolis and Oprozomib, which is in phase 1b trials.

BioMarin may be similarly attractive, given Vimizim, used to treat Morquio A, recently won support from a key FDA advisory panel in November. BioMarin also has promising compounds in trials for Pompe disease, chondroplasia, Batten disease, and breast cancer.

Foolish final thoughts
Thanks in part to BioMarin, the race to develop new therapies for rare disease is building momentum across companies both big and small. That's driving more money into young companies through partnerships and supporting much larger acquisitions. It remains to be seen if BioMarin will find itself linking up with a suitor in 2014. But if it doesn't, a stable and growing franchise of orphan drugs suggests BioMarin is nicely positioned to go it alone.