[paulgb]

But pharma research is expensive, so what incentive does a company have to fund research if it isn't granted a (temporary) monopoly on the results? They would end up protecting their innovation through trade secrets, which essentially gives them a monopoly until someone duplicated their efforts. This is the situation patents exist to avoid.

Even if a bunch of companies are collaborating to create a new drug, the dominant strategy for a company is to not be involved in the collaboration, since you get the IP without the cost. (Ignoring the possibility of trade secrets)