My take

IP is the best thing for open source drug discovery. The purpose of IP is to prevent “propriety” information. Patent is a complete disclosure your invention.

Using Pfizer as an example. It focused their effort to Cancer, Diabetes and Alzheimer back in 2008 (when they were really in trouble). So all the compounds that showed no effects to these diseases are “intangible asset” that sit on the shelf doing NOTHING. Now, they give it to Wash. University and hoping the university can get some use out of it.

If it works out, say some professor found one of these compounds can treat male pattern boldness (just what come to mind). Now, since Pfizer own the IP on the compound, it can license the compound and get licensing revenue. Now they are converting non-tangible asset into tangible asset (BRILLIANT).

The worst case scenario will be a professor find one of these compounds can cure Alzheimer’s (things that Pfizer is interested in), and the professor will sell the IP. So, at this point, Pfizer will have to bid higher than its competitor (Did I mention that Pfizer are sitting on $17000000000 (NINE ZEROS) CASH from 2009 operation?).

Either way, the downside of open source for big pharma is very small, while the upside is very attractive.

The cost of FDA approval is huge because the drugs keep failing in clinical trial. Make matter worse now is that the pharma refuse to tell people why the drug fail in clinics. So other pharma are failing similar drugs for same reason. Sooner or later, they know that they have to work together to share this info to reduce cost (we see tons of pharma merger last couple years right?). If they are looking for the most efficient model, a co-petition model (collaborate with competitor) will be their best choice, but it will require them to share their proprietary information. And by opening up this info, it can reduce the cost of the drug discovery. Pharma have a choic: DIE TOGETHER or HELP EACH OTHER TO SURVIVE.

So to answer your question, open source will become mainstream in the near future.

To know more, please read: Open Innovation by Chesbrough and The Word is Flat by Friedman