To meet the challenges of research and development, the pharmaceutical industry must adopt more open source innovation—a concept that has been used for nearly three decades by the information technology sector—to promote innovation in the drug discovery process and boost bottom lines, according to a new report by Frost & Sullivan.

Open source innovation is a way to collaborate during a product’s research and development by enabling information sharing across companies, institutions, areas of expertise and research platforms. By contrast, the closed innovation model has a single company discover, develop, gain regulatory approval for and launch a new drug on its own—a difficult business model, the report said.

And a recent Morgan Stanley report stressed that the pharmaceutical industry’s current success rates are not sufficient to sustain large internal R&D organizations, concluding that companies must improve success rates or decrease the cost of failures.

So drugmakers have turned to outsourcing drug discovery and development to contract research organizations (CROs) and cooperating in the development of technologies to improve R&D productivity and efficiency.

“The key benefits of open source innovation in pharma include creativity, arising from bringing together the best minds to solve problems, and speed, due to a simpler project management framework compared with internal pharma projects,” said Frost & Sullivan senior research analyst Rasika Ramachandran. “Risk sharing, greater impact due to the pre-emptive nature of these projects, flexibility to discontinue non-profitable projects and affordability are among its other advantages.”

These benefits match the current needs of the pharmaceutical and biotechnology communities, the report said, so that open source innovation is set to experience a wider application.

However, the challenges are considerable. Who will fund open source innovation, and who will coordinate and take the lead on open source programs? There are issues surrounding regulatory filing, providing incentives and finding talent. But perhaps the largest issue is patent exclusivity. Drug companies now spend $1 billion to develop a drug and expect to receive monopoly profits during the patent exclusivity period. A major chunk of that money goes toward clinical trials, which require “enormous resources to plan and execute,” the analysis stated.

One possible solution, the report suggested, is government funding of open source initiatives through universities, which would function as coordinating arms. Members would pay an annual fee for access to a database of open source knowledge.

Two current examples of open source innovation not cited in the report operate in the U.S and Europe. The Alzheimer’s Disease Neuroimaging Initiative (ADNI) is a private-public partnership designed to test whether serial magnetic resonance imaging (MRI), positron emission tomography (PET), other biological markers and assessments can be combined to measure the progression of mild cognitive impairment and early Alzheimer’s disease. By learning how Alzheimer’s disease unfolds in the brain and discovering new biomarkers, scientists aim to develop improved methods for clinical trials and provide a large database to improve trial design.

Of the initial $60 million in funding, $20 million came from the pharmaceutical industry. Participation by U.S. and European researchers has led to more than 100 studies. Under the collaboration, coordinated by the Alzheimer’s Disease Cooperative Study at the University of California, San Diego, no one owns the data, anyone can use the data and there are no patents on the intellectual property.

Earlier this year, GlaxoSmithKline announced an “open invitation” strategy to help deliver new and better drugs for diseases such as malaria that affect people living in the world’s poorest countries. First, data was released on more than 13,500 compounds that could ultimately lead to new treatments for malaria. GSK has teamed up with the U.S. National Library of Medicine and the European Bioinformatics Institute to make the compounds and their structures available at no cost to researchers. It also has invested $8 million in seed money to establish an “Open Lab” at its research facility in Spain. As many as 60 scientists from around the world will be able to work at the lab.

—Ronald Rosenberg