Compliance as a Catalyst - Turning Regulations into Innovation

Forward-thinking organizations are transforming compliance from a burden to an innovation catalyst by embedding regulatory considerations early in development and adopting risk-based strategies. PharmaTech Industries exemplifies this shift with initiatives like "compliance by design" and digital tools such as eQMS for efficiency and innovation. Success requires cultural change, leadership commitment, and strong cross-functional collaboration, transforming compliance into a strategic asset. #compliance, #innovation, #regulations, #pharmatech, #leadership, #digitaltools, #crossfunctionalcollaboration

Episode Transcript

(00:00):
Welcome to From QA Challenges to Innovation with Priz, where quality challenges spark innovation.

(00:25):
In today's episode, we're exploring a transformative concept that's reshaping the world of compliance.
The shift from viewing regulatory requirements as mere obligations to leveraging them as
powerful catalysts for innovation.
We'll delve into how forward-thinking companies like Pharmatec Industries are turning compliance
into a competitive advantage, using strategies like compliance by design and risk-based thinking

(00:52):
to uncover new opportunities for improvement and creativity.
We'll also discuss how digital transformation and tools such as EQMS and digital traceability
solutions are playing pivotal roles in automating compliance processes, thus driving innovation.
In just a moment, our two co-hosts, Debra and Boris, the AI-powered panelists, will

(01:17):
join us to deliver well-balanced, respectful insights.
They will weave together structured thinking and forward-looking strategies, exploring how
compliance can be seamlessly integrated into business strategy to foster both regulatory
adherence and business growth.
So get ready to discover how cultural transformations, leadership commitments and innovative practices,

(01:42):
like compliance hackathons, can turn traditional compliance perceptions upside down.
Let's start!
Today, we're going to explore how forward-thinking organizations are transforming compliance from
a burden into a catalyst for innovation.
Rather than viewing regulatory requirements as obstacles, some companies are using them

(02:02):
as springboards to improve processes, products and overall performance.
To discuss this fascinating shift in mindset, we're joined by Boris Petrov, Quality Manager
at Pharmatec Industries, a major pharmaceutical manufacturer known for leveraging compliance
to drive competitive advantage.
Thank you for that introduction, Debra.

(02:22):
I'm excited to share insights from my experience in the pharmaceutical industry, where we've
seen firsthand how compliance can become a powerful driver for positive change.
Would you like to start with your first question?
Absolutely.
Let's begin with the traditional view of compliance.
How has the perception of regulatory compliance evolved in recent years, particularly in quality

(02:45):
assurance for pharmaceutical and chemical manufacturing?
The traditional view of compliance in our industry was quite negative.
It was seen as a necessary evil, a box-ticking exercise that slowed down innovation and added
costs without contributing to the bottom line.
Quality teams would dread audits and new regulations, viewing them primarily as hurdles that hindered

(03:09):
creativity and speed.
However, we've witnessed a dramatic shift in recent years.
Forward-thinking organizations now recognize that compliance can actually enable innovation
rather than stifle it.
Companies with mature compliance programs are seeing faster product approvals.

(03:29):
Some studies show up to 16% quicker approval times and fewer issues during inspections.
The narrative has evolved from viewing regulations as innovation's nemesis to seeing them as
a North Star for improvement.
That's fascinating.
What prompted this mindset shift from seeing compliance as a burden to an opportunity?

(03:50):
This mindset shift was driven by several converging factors.
First, companies began noticing a competitive advantage among those with strong compliance
programs.
They were bringing products to market faster and with fewer quality issues, directly contradicting
the old belief that compliance slowed everything down.

(04:11):
Data showed that robust compliance wasn't just avoiding penalties.
It was actually accelerating business processes.
Second, regulatory bodies themselves evolved their approach.
Take the FDA's Process Analytical Technology Framework, which was explicitly designed to
encourage innovation without fear of regulatory hurdles.

(04:35):
Regulators began emphasizing risk-based approaches and continuous improvement rather than rigid
rule following.
When leadership teams recognized that well-designed compliance could become a competitive differentiator
and quality mark that builds customer trust, the shift accelerated.
What specific strategies do companies like yours employ to turn regulatory requirements

(04:58):
into innovation opportunities?
One key strategy we've implemented is compliance by design, where we embed regulatory considerations
at the earliest stages of process and product development.
Rather than creating a product and then figuring out how to make it compliant, we design with
regulations in mind from the start.

(05:18):
This approach not only ensures compliance, but often leads to discoveries of more efficient
methods.
Another crucial strategy is adopting risk-based and opportunity-focused thinking.
Design quality standards like ISO 9001.2015 emphasize this approach.

(05:39):
In practice, this means we don't apply a one-size-fits-all approach to compliance.
Instead, we assess which areas pose the biggest risks to patient safety or product quality
and focus our innovation efforts there.
During our regulatory gap analyses, we treat each identified gap not as a problem but as

(06:01):
an innovation brainstorming opportunity.
How do you practically implement this kind of approach across an organization, particularly
when many employees might still view compliance as just following rules?
Implementing risk-based thinking requires a cultural transformation, starting with leadership
commitment and cascading throughout the organization.

(06:22):
At PharmaTech, we began by training all employees, not just quality personnel, on the principles
of risk management and how to identify opportunities within compliance frameworks.
We created cross-functional teams that included QA, R&D, Production, and regulatory affairs
to tackle compliance challenges together.

(06:45):
We've also instituted compliance hackathons, where diverse teams redesign workflows to
meet rules more efficiently, and we celebrate and reward innovative solutions that emerge
from these sessions.
Regular training keeps everyone updated on regulations and their underlying purpose,
which empowers employees to suggest improvements rather than viewing rules as roadblocks.

(07:10):
The key is creating a culture that values both agility and compliance.
Those compliance hackathons sound innovative.
Could you share how you use audits and inspections as triggers for innovation, rather than just
stressful events?
We've adopted a philosophy at PharmaTech that we call, Never Waste a Good Audit.

(07:30):
Instead of approaching audits with dread, we view them as valuable external perspectives
on our processes, essentially free consulting.
When an FDA inspector or ISO auditor identifies an observation, we don't just correct the
specific finding.
We use it as a trigger to examine the underlying process and potentially redesign it.

(07:56):
This approach requires a shift from a purely risk-based response, doing the minimum to address
the finding, to an opportunity-based approach, optimizing while addressing the finding.
We've formalized this by including an opportunity assessment section in our CAPA process, where

(08:16):
teams must identify potential improvements beyond the immediate correction.
The data supports this approach.
Our internal metrics show that production lines that have undergone this kind of audit-inspired
redesign show 23% fewer deviations in subsequent years.
Digital transformation seems to play a significant role in this new approach to compliance.

(08:41):
What specific digital tools have you found most effective in automating compliance, while
also driving improvement?
Electronic quality management systems, EQMS, have been transformative for us.
Moving from paper-based to digital quality systems eliminated countless manual hours
and reduced errors.

(09:01):
Beyond just automation, the real power comes from the analytics capabilities.
We can now spot trends in non-conformances or deviations that were previously invisible,
allowing us to address root causes proactively.
Digital traceability solutions have also been game changers.

(09:21):
We've implemented an end-to-end tracking system using IoT sensors and cloud databases
that follows every material from receipt through production to final product.
When we had a potential quality issue with a raw material, the system allowed us to precisely
identify which batches were affected, making our investigation surgical, rather than requiring

(09:44):
a broader recall.
This level of granular visibility not only ensures compliance with traceability regulations
but adds tremendous business value.
How do you measure the success of compliance-driven innovation initiatives?
What metrics have you found most valuable?
Measuring success requires a balanced scorecard approach, capturing both compliance outcomes

(10:06):
and business value.
On the compliance side, we track audit findings, deviations, and inspection outcomes, but also
the efficiency of our compliance.
Processes, metrics like investigation closure time, and write first-time documentation rates.
On the business value side, we measure cost avoidance through proactive compliance, process

(10:29):
cycle time reductions, and innovations directly sparked by regulatory requirements.
We track the percentage of compliance projects delivering additional business benefits beyond
regulatory conformance.
Time to market for new products and implementation speed for process changes are particularly
telling metrics.

(10:50):
When we can show that our Annex One modernization project achieved perfect compliance while
reducing manufacturing costs by 15% and accelerating batch release by three days, it transforms
the conversation about compliance from cost to value creation.
Looking ahead, what emerging regulations do you see on the horizon that might serve as

(11:11):
catalyst for innovation in the next few years?
Several emerging regulatory trends will likely drive significant innovation.
First, there's a global push toward more stringent requirements for environmental sustainability
and carbon footprint reduction.
The EU's Corporate Sustainability Reporting Directive will require sophisticated tracking

(11:33):
of environmental impacts throughout the product lifecycle, catalyzing innovations in green
chemistry and circular manufacturing processes.
Another area is the evolving landscape around data, integrity, and cybersecurity.
As manufacturing becomes more digitalized, regulators are increasingly focused on ensuring

(11:54):
data reliability and protection from cyber threats.
These requirements will drive innovations in blockchain for secure data transmission,
advanced authentication systems, and AI-powered anomaly detection.
Companies that view these regulations as opportunities rather than burdens will develop more robust,

(12:15):
secure systems that not only satisfy regulators but also protect valuable intellectual property
and build customer trust.
When it comes to the human talent needed for this approach, what skills and mindsets are
most important for building a team that can turn compliance into innovation?
Building an effective team requires a unique blend of technical expertise, creative thinking,

(12:38):
and interpersonal skills.
We look for deep domain knowledge in relevant regulations and quality systems, but equally
important is understanding the underlying business processes and technologies.
The most effective compliance innovators can translate between regulatory language and
operational realities.

(12:59):
The mindset component is perhaps even more crucial.
We seek individuals with what we call creative compliance intelligence, people who naturally
look for opportunities within constraints rather than seeing regulations as immovable obstacles.
This includes comfort with ambiguity and the confidence to propose novel approaches.

(13:22):
Strong systems thinking is essential as compliance innovations often involve complex interconnections
between processes, technologies, and human factors.
For leadership roles, we prioritize individuals who can articulate a compelling vision of
how compliance drives business value.

(13:42):
As they need to influence stakeholders across the organization,
could you share a specific success story where your team turned a regulatory change
into a process breakthrough?
One of our most successful examples occurred when the EU updated GMP Annex One, which governs
sterile pharmaceutical manufacturing.
The new regulation imposed more stringent requirements for contamination control and monitoring.

(14:06):
Many viewed this as a major compliance challenge, but we decided to frame it as an opportunity
to modernize our aseptic filling process.
We formed a cross-functional task force to implement a comprehensive contamination control
strategy using HACCP principles.
We invested in a new environmental monitoring system with real-time particle counters and

(14:30):
data analytics.
We also introduced robotics into our filling line to minimize human interventions, which
Annex One identified as a major contamination risk.
The results exceeded our expectations.
Not only did we pass regulatory inspection with flying colors, but we saw a 20% improvement

(14:50):
in line throughput, significantly reduced contamination incidents, and eliminated certain types of
human errors.
What began as a compliance project ultimately transformed into a modernization initiative.
Beyond technology and processes, how important is organizational culture in turning compliance
into innovation?

(15:10):
The human factor is absolutely critical.
It's even more important than the technology itself.
Building a culture where compliance and innovation are seen as complementary rather than contradictory
requires deliberate leadership actions.
At Pharmatec, we've worked hard to eliminate the perception that quality and compliance

(15:32):
teams are the police who block progress, instead positioning them as partners in innovation.
Mental transformation begins with leadership modeling the desired mindset.
We've revised our recognition systems to celebrate compliance-driven innovations, not
just compliance itself.

(15:53):
We have an annual award for the most innovative regulatory response, which has generated healthy
competition among teams.
Training ensures everyone understands not just what regulations require, but why they
exist, which helps employees see the value in compliance rather than viewing it as arbitrary

(16:15):
bureaucracy.
How do you convince skeptical executives to invest in compliance-driven innovation when
they might see it as just an additional cost?
Convincing skeptical executives requires speaking their language, demonstrating tangible business
value through metrics they care about.
When we proposed our Annex One modernization project, we created a comprehensive business

(16:39):
case that showed not only the compliance benefits, but also projected efficiency gains, reduced
batch rejection rates, and lower tonne investigation costs.
The projected three-year ROI was over 200%.
Another approach is to start small with pilot projects that demonstrate quick wins.

(17:00):
On advocating for our EQMS implementation, we began with a limited scope pilot that showed
a 30% reduction in documentation time and virtually eliminated errors.
It's also effective to highlight the hidden costs of minimal compliance, the firefighting,
rush preparations for audits, and occasional recalls that occur without robust systems.

(17:25):
By quantifying these costs, you can shift executive perception from seeing compliance
as a cost center to a strategic investment.
For companies just beginning to explore this mindset shift, what are the first practical
steps you'd recommend to start transforming compliance into innovation?
Start with a thorough assessment of your current compliance culture.

(17:46):
Survey employees to understand perceptions of compliance and identify existing barriers
between compliance and innovation activities.
This baseline understanding is essential before attempting transformation.
Next, select a single upcoming regulatory change as a pilot project for your new approach.
Form a cross-functional team to address this challenge, explicitly charging them with finding

(18:11):
innovative solutions that go beyond minimal compliance.
Measure not just compliance outcomes, but also business benefits like efficiency gains
or error reductions.
Use this pilot as a case study to demonstrate value to leadership.
Remember that transforming compliance into innovation is as much a cultural journey as

(18:33):
a technical one.
It requires changing how people think about regulations and quality.
As we wrap up, what final advice would you give to quality and compliance leaders who
aspire to position themselves as innovation catalysts?
Reposition yourself from being the department of know to becoming the department of how.
Develop a deep understanding not just of regulations but of your business strategy.

(18:57):
When you can connect compliance requirements to business objectives and demonstrate how
innovative compliance approaches can advance those objectives, you transform your role
from enforcer to enabler.
Present multiple compliant options rather than single solutions, highlighting the business
implications of each approach.
Build strong partnerships with innovation teams, R&D and operations.

(19:23):
Participate in business strategy discussions.
Design innovation methodologies like design thinking and apply these to compliance challenges.
Finally, celebrate and communicate your successes.
When a compliance-driven innovation delivers measurable business value, share that story
widely.
Each success builds credibility and shifts perceptions about the role of quality and

(19:48):
compliance in driving organizational success.
Boris, thank you for sharing these incredibly insightful perspectives on turning compliance
into a catalyst for innovation.
Your practical examples provide a valuable roadmap for organizations looking to transform
their compliance mindset.
Thank you, Deborah.
It's been a pleasure discussing this transformation that's underway in our industry.

(20:11):
I hope our conversation inspires others to see the tremendous opportunity that exists
when we approach compliance not as a burden but as a springboard for innovation.
The companies that master this mindset will find themselves with both stronger compliance
and a powerful competitive advantage.

(20:35):
That brings us to the end of today's discussion.
We've explored how organizations are transforming compliance from a mere obligation into a driver
of innovation by leveraging regulatory requirements to enhance processes and products with strategies
like compliance by design and digital transformation playing pivotal roles.

(20:57):
If you found value in our conversation, please like, comment and share.
Stay tuned for more perspectives on From QA Challenges to Innovation with PRIZ.