Pharmaceutical and biotechnology companies must work harder to get optimal leverage out of open-source innovation in addressing the crucial challenges of research and development, a new analysis says.

A concept imported from the information technology sector, where it was taken up more than three decades ago, open-source innovation is now being successfully applied by the pharmaceutical and biotechnology industries to promote innovation in drug discovery and to boost bottom lines, notes the analysis by Frost & Sullivan. However, there are a number of challenges to overcome before the approach can be more widely distributed.

As Frost & Sullivan points out, among the key drivers for a transition from closed to open innovation has been the Human Genome Project. It has generated huge volumes of data that need converting into “actionable knowledge” – a task expected to take a few decades yet.

Better knowledge of the way the human system works has opened up far more complex areas of research to pharmaceutical and biotechnology companies, with potential benefits for patients and the industry but also the drawbacks of escalating R&D costs, loss of productivity and smaller drug pipelines. In today’s environment, Frost & Sullivan observes, it is increasingly difficult for companies to develop and launch a new drug single-handed.

This is where open-source innovation comes in, following in the grain of other emerging models such as outsourcing of drug discovery and development to contract research organisations as well as co-operative development of technologies to improve R&D productivity and efficiency.

As the Frost & Sullivan analysis, Open Source Innovation in the Context of Pharma and Biotech, notes, the open-source approach enables information-sharing across companies, institutions, areas of expertise and research platforms.

The key benefits, Frost & Sullivan says, include:

• the creative boost of bringing together the best available minds to tackle the problem of “extremely challenging” diseases;                                                                                     
• significant gains in the speed of innovation, as open-source research allows for a more streamlined project-management framework than internal company programmes;            
• risk-sharing, with projects easily discontinued if they do not look promising;  
• affordability, with smaller organisations accessing equipment and research talent normally reserved for the largest companies or institutes;      
• greater impact, due to the pre-competitive nature of the collaborations;   
• harnessing knowledge from scientists in developing countries who have closer contact with diseases such as malaria.

One of the main barriers to more widespread open source innovation, Frost & Sullivan believes, is economic. Industry can invest in drug development costing over US$1 billion because it expects to receive monopoly profits during the patient exclusivity period. Clinical trials, in particular, require “enormous resources to plan and execute”, the analysis points out.

Theoretically, open-source committees could apply to government for at least part of their funding. However, “if society is staking a large per cent of its GDP on funding open source, there will need to be a broader, more reliable decision process”, Frost & Sullivan comments. “Today, capital markets decide which companies are funding, and depending on the government to regulate the industry will be a big risk.”

One possible solution, the analysis suggests, may be for government to fund open-source initiatives through universities, which would function as co-ordinating arms. An annual charge could be levied for membership of a database of open-source knowledge. The fee would be structured in multiple tiers to accommodate different levels of usage and the benefit gained from that knowledge.

Other challenges revolve around co-ordination and leadership. For example, researchers may be able to devote a “fraction of their free time” to open-source projects, but securing the full services of senior leaders may be hard if they have signed non-disclosure agreements and have vested their career in a particular corporation, Frost & Sullivan observes.

Moreover, pharmaceutical research cuts across many disciplines and is highly complex. That calls for significant co-ordination, as “problem-solving is not as modular and it would be impossible for one person to keep track of the information needed”, the analysis notes.

The best example of co-ordination among existing open-source initiatives, it adds, is public-private partnerships. In these, virtual R&D is conducted through contracts, relationships and co-ordinating bodies. Another possibility, Frost & Sullivan suggests, is to harness entrepreneurs as co-ordinating leaders.

“If projects are public”, it says, “entrepreneurs can gather information on promising investments and fund co-ordination teams that provide leadership.”