Researchers at Brainwave Discovery Limited concede that their research will not only provide an alternative to experiments on mice, but will also knock millions of pounds off the drug testing process, and allow a dramatic increase in the number of pharmaceuticals entering trials.
While there are many animal rights protesters, who support the move away from using laboratory mice in drug testing, there are those who consider the use of fruit flies in experiments as "unacceptable" and "bad science".
In the method, the scientists isolated a human gene for any disease of the central nervous system, such as Alzheimer's, and injected it into the embryos of fruit flies. The gene was specifically engineered to affect a single area of the fly's brain to avoid side effects.
Simultaneously, scientists injected the embryo with a gene isolated from a species of deep-sea jellyfish that emits flashes of blue and green light so that the infected part of the fly's brain flashes when it is active.
After hatching after a few days, the flies look and act like normal flies except for emitting a blue light that is only visible under a microscope, from their brains.
The flies are then fed the drug, and if the blue light flashes to green, the drug is working and should be further tested for use in humans. If the brain does not flash, the drug is not effective.
And if the scientists receive the "green light" from the first generation of flies, they can take a step further by adding one more human gene to those flies' offspring, which inherit the human and jellyfish genes of their parents.
It is because of the short life cycle of the flies, that increasingly complex generations of the insects can be developed within months, making drug tests even more sophisticated.
The fruit flies' brains are barely visible to the naked eye as they are less than 0.7mm in diameter. Scientists use a digital microscope that magnifies the fly by 40 times just to see the tiny emissions of light from its brain.
"The advantage of using fruit flies is that we save companies time and money. Fruit flies hatch within days and live for a maximum of 100 days, so it takes just weeks to get results rather than months, as with mice," the Scotsman quoted Dr Douglas Armstrong, chief scientific officer of Brainwave Discovery Limited, as saying.
He added: "It is very expensive to manufacture tested drugs, so the fact that the flies need only a tiny amount knocks a lot of money off the cost of testing. The flies also need less care in the lab, which is cheaper.
"Testing is the biggest single cost to the pharmaceutical company, running into tens of millions of pounds, so potential new drugs are not tested at all because of the cost. We can knock millions of pounds off that initial test and do it very accurately because we can use 100 fruit flies instead of 10 mice."
While the testing process currently takes 10 to 13 years using mice, the breakthrough could lead to drugs being available to the public quicker than before.
Fiona Ogg, chief executive of animal rights group Advocates for Animals, said: "The use of any animal is unacceptable and poor science. There is no perfect animal or insect human model. An insect with human proteins put into its insect brain is not a little person. Because of species' differences in structure, function and physiology, each species responds differently to drugs and chemicals."
Philip Wright, science director at the Association of the British Pharmaceutical Industry, agreed fruit flies could not solve the problems of drug testing.