In July, the Imperial Business Partners team brought together a panel of industry experts to discuss innovation in highly regulated industries. We wanted to explore whether regulation can aid innovation or stifle it. What does that look like for different sectors, and how does it vary, depending on the size of your organisation, the stage of your company, or your global location?
Our speakers included Loy Lobo, President of the Digital Health Council at the Royal Society of Medicine and Visiting Lecturer at Imperial College Business School; Virginia (Ginny) Acha, Associate Vice President for Global Regulatory Policy at MSD; Reka Tron, Co-Founder and Chief Operating Officer at Multus; and Sophie Adams, Head of Consumer Experience at the Department forTransport.
Find out more at the event page.
Panel moderator, Gareth Mitchell, from Imperial’s Science Communication Unit, began by asking the panel why we need regulation in the first place…
Why do we need regulation in innovation?
There has been regulation in the healthcare industry for more than 100 years. Ginny argues that without it, innovation cannot happen at the pace or scale you are expecting or hoping for. “What regulation does is establish a basis for trust and predictability; that is valuable not only for the innovator but it’s also absolutely critical for the user and for society,” she explains.
Loy operates at the leading age of digital healthcare and has never seen a regulator go against innovation in his sector.
“In an industry like ours, I don’t think anyone would like to be at the receiving end of technology that was not subject to regulation.” – Loy Lobo
Sophie is leading the rollout of zero-emissions vehicles in the UK and the public charging infrastructure required to support that. Her work is heavily data-driven and while she believes there is a huge role for regulation, it is also crucial that it does not stifle what comes next.
“Government may not always be the most innovative,” she argues “but they are aiming to understand how data can be used in the best way possible to inform our policies and to get that information to the right people at the right time.”
How can innovators work with regulators?
Reka’s work to make cultivated meat affordable and sustainable sits on the border between the food and pharmaceutical industries. This means she needs to navigate regulation on both sides, where the definition of what makes a product safe is not always the same.
As a smaller start-up, Multus is in a special position.
“Because we are a completely new industry, regulation is still being established. This gives us the opportunity to have an open conversation and negotiation with the regulators about the best possible outcome.” – Reka Tron
Ginny agrees that conversation and negotiation are always key, even for established products. “You’re combining science and law, trying to create a case for your product with the evidence you have. You must decide as a company, and with the regulator, does it meet the requirements for quality, safety, and efficacy. To make these decisions, the calibre and background of regulators is key. Innovation would not be possible without their experience and expertise.”
Can the regulators keep up?
Regulators need to understand what challenges are out there and what innovation is emerging. For Sophie, it is all about engaging with different parties in the industry.
“Regulation is rigid and doesn’t always allow for fast-paced change in the modern world. It’s important to engage early and make your voice heard.” – Sophie Adams
This engagement is as much about government regulators going out into the field and understanding how innovation is changing. “It is a two-way street, and there are definite stepping stones for both sides to take which are essential in helping industry flourish,” she adds.
Loy believes the key for start-ups, especially in the UK, is to work very closely with the regulators. “Having that ongoing conversation and collaboration around what is the right framework to promote quality and safety, and protect innovation, is the key for everyone,” he explains.
Does politics impede innovation and regulation?
Ginny strongly believes that a regulator should be independent of the administrative government. “Independence is absolutely critical,” she argues. “If a regulator can’t make a decision based on the evidence they are looking at, you will not have predictability and there won’t be trust in the system.”
Sophie agrees. “It comes down to our evidence base. When we regulate and consult, we have stringent questions that we must ask. There is a definite political drive, but it’s up to civil servants and the regulator to argue that evidence and hold firm and understand the big challenges.”
For Loy, public opinion groups, lobby groups, and the media cannot be ignored. “Regulators, although they are objective, are not immune to the background noise, so as an organisation, it’s important to be conscious of the lobby groups and opinions that you’ll be up against.”
“It doesn’t matter if you’re big pharma or a small company, it’s the quality of your data that is important. The proof is in the pudding. If regulation were only about influence, that would not be happening.” – Ginny Acha
Reka’s experience also shows that at a broad level, the political direction of a country (for example, going net zero in the UK) can have a positive impact on innovation. “We’ve found that regulators are more open to coming to the table to negotiate, because of that bigger picture,” she adds.
What role can trade associations play?
As a regulator, Sophie sees a huge role for trade bodies. “When you are dealing with multiple companies, it’s a challenge to get around everyone. Having a single person to speak to can help collate and channel their views. Finding the right people to talk to is essential for government and other regulators, but for innovators too,” she explains.
Trade bodies are particularly useful for new companies that may not be sector specific. Reka adds: “There is a huge value in trade associations for companies like mine. It’s a space where you can exchange ideas within the industry and create a space to educate regulators and politicians about issues.”
“Without regulators, lots of additional conversations would need to be had within the industry to make sure we are aligned. We want to work in a fair and respectable industry where our competitors are responsible for each other.”
Can you make ethical decisions in the absence of regulation?
Loy believes this is a really difficult dilemma. “From an innovator’s point of view, on the one hand, if I spot a loophole in the regulatory framework, I can exploit it, make money, and let someone else fix the problem. But if I’d like to create a business that doesn’t get stopped by the regulators in the future, I need to engage in dialogue early and accept that I may lose the competitive advantage.”
Reka agrees that if there is potential for regulators to enforce stricter guidelines in the future then you should get ahead and be part of the conversation as early as possible. Ginny has seen regulators become increasingly creative in the way they deal with start-ups. “Regulators are moving to what we call sandbox structures; they go in during very early stages, usually with two or three companies involved, and they help companies to come out with approaches that suit everyone right from the start.”
What are the challenges for innovation and regulation in the future?
All our panellists agreed that true innovation cannot happen without a regulatory framework.
Reka believes that increased funding for innovation is crucial. “Companies need to start considering regulation earlier in their pipeline; funding innovation more effectively will pay off on the regulatory side too,” she explains.
Ginny argues that regulators also need to be properly resourced. “We need the wherewithal to anticipate the future,” she explains. “We need to build a better relationship with academia to help us future-proof our work, and hire more people who understand AI – not just to develop better treatments and measures – but also to better understand how to do the regulatory work itself.”
Sophie believes that as we move to net zero, we need different sectors to work together more efficiently. “Data sharing is a huge challenge, across government and industry,” she explains. “We need to break down these silos and think about how regulation evolves to reflect the modern world.”
And Loy would like to see a future for global health that focuses on education, nutrition, and prevention rather than an interventionist system. “And I would look for a regulator and a funding mechanism that incentivises that prevention model,” he adds.
Contact the IBP team to learn more about working with IBP and Tech Foresight.