Calling Kodak “one of the great brands in the world,” President Donald Trump yesterday announced it would be receiving a $765 million government loan under the Defense Production Act to start producing essential pharmaceutical ingredients previously supplied by other countries.
In a rare display of bipartisan enthusiasm, New York governor Mario Cuomo wrote in his daily COVID-19 update that the loan to the “storied New York manufacturer based in Rochester” will allow Kodak to create a new business unit, Kodak Pharmaceuticals, that will create 300 direct jobs and 1,200 indirect jobs in the state.
The new direction is definitely a reversal of fortunes for the company, which has been disassembling for decades.
“Kodak’s stock rallied more than 200% on Tuesday after the news was announced by the Trump administration. The company emerged from a 2011 bankruptcy in 2013, and its shares tumbled from a 10-year high of $37.20 on Jan. 9, 2014, to a low of $1.55 on March 23 of this year,” Jaimy Lee reports for MarketWatch.
“The loan is from the U.S. International Development Finance Corporation, a government agency akin to a bank,” Rachael Levy, who broke news of the development, reports for The Wall Street Journal.
“Trump touted the loan in a press conference Tuesday. ‘It’s a breakthrough in bringing pharmaceutical manufacturing back to the United States,’ he said. The president said Kodak would not only produce ingredients for generic drugs, but also make starting materials ‘that are the building blocks for many drugs in a manner that is both cost competitive and environmentally safe,’” Levy continues.
“DFC normally funds infrastructure and other projects in the developing world. But in an executive order signed in May, President Trump gave DFC new powers under the Defense Production Act to finance domestic health-care manufacturing needed to respond to the coronavirus crisis,” Jeanne Whalen writes for The Washington Post.
“Shortages of face masks and other protective equipment for doctors and nurses have raised concerns in recent months about U.S. reliance on China and India for pharmaceutical ingredients and finished medicines. About 40% of the world’s supply of drug ingredients is used to produce generic medicines for Americans, but only 10% these materials are manufactured in the United States, according to DFC,” Whalen continues.
“Kodak Pharmaceuticals will make critical pharmaceutical ingredients that have been identified as essential but have lapsed into chronic national shortage, as defined by the Food and Drug Administration. The government loan will help support startup costs needed to repurpose and expand Kodak’s existing facilities in Rochester, New York, and St. Paul, Minnesota,” the AP’s Kevin Freking reports.
“The Kodak unit will have the capacity to produce up to 25% of the active pharmaceutical ingredients needed to make generic drugs in the United States, Trump said,” Freking adds.
“By leveraging our vast infrastructure, deep expertise in chemicals manufacturing, and heritage of innovation and quality, Kodak will play a critical role in the return of a reliable American pharmaceutical supply chain,” Kodak executive chairman Jim Continenza stated in the DFC news release.
That’s the plan, anyway.
“A Kodak engineer invented the first digital camera in 1975, but the company failed to recognize the technology's potential. Fujifilm was quicker to pivot to digital, introducing the world's first digital portable camera in 1988, and the Japanese firm was faster to diversify away from photographic film,” Naomi Xu Elegant reports for Fortune.
“Fujifilm is also several steps ahead of Kodak in the pharmaceutical realm. Health care and material solutions made up 43% of Fujifilm’s total revenue in 2019, and the company aims to double its health care sector sales over the next few years,” Elegant adds, going on to detail several of Fujifilm’s successful acquisitions since acquiring a medical diagnostic imaging company in 1986.
And “this isn’t the first time Kodak has dipped its toes into pharmaceuticals, though it only stayed in the business for a few years the last time around. Kodak bought drug-maker Sterling Drug for approximately $5.1 billion in 1988 before selling it in pieces in 1994,” Jay Peters writes for The Verge.