As best I can tell, Novartis (NYSE:NVS) has discovered a great drug, Ilaris, which was approved yesterday. Unfortunately, it's not likely to be a blockbuster for a while.

Ilaris was approved to treat CAPS. No, not the Motley Fool investing community; this CAPS (cryopyrin-associated periodic syndrome) is a group of auto-inflammatory disorders that causes the immune system to overreact. Come to think of it, overreacting is something I seem to do when I log in to see that my (Fool) CAPS score has gone down, so maybe the two are similar.

CAPS is an ultra-orphan indication. When Regeneron Pharmaceuticals (NASDAQ:REGN) got Arcalyst approved to treat CAPS last year, the company reported that the frequency of the disease is about 1 in 1 million people in the U.S. -- meaning about 300 patients to treat. That's much smaller than the populations that Biomarin Pharmaceuticals' (NASDAQ:BMRN) and Genzyme's (NASDAQ:GENZ) orphan drugs treat and the sales show it: Regeneron only expects to ship out $15-$20 million worth of Arcalyst this year. Even if Ilaris takes the entire market, and it'll likely take a big chunk considering that it needs to be injected less often than Arcalyst, it'll still be not much more than a rounding error for Novartis' revenue.

So why are Novartis and Regeneron developing drugs that treat so few people? Because the protein that is overproduced in CAPS patients, interleukin-1 beta, has been implicated in causing symptoms of patients with other diseases including gout, systemic juvenile idiopathic arthritis and type 2 diabetes.

That last one should pique your interest. There are over 23 million diabetics in the U.S. and most of those are type 2. Merck (NYSE:MRK) sold $1.4 billion worth of Januvia last year. That's about as far from orphan-drug status as you can get.

Getting approved for a small indication and then working up from there is a pretty common strategy -- think Onyx Pharmaceuticals' (NASDAQ:ONXX) Nexavar and Pfizer's (NYSE:PFE) Sutent treating fairly rare kidney cancer before moving into the larger breast cancer market -- Novartis and Regneron have just taken it to the extreme.

An orphaned further Foolishness:

BioMarin Pharmaceutical is a Motley Fool Rule Breakers recommendation. Pfizer is an Inside Value pick. Novartis is a Global Gains selection. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Fool has a disclosure policy.