Kodak jumps into pharmaceuticals production

Kodak is in the process of setting up a new business unit, Kodak Pharmaceuticals, following a loan of $765 million from the US government in an effort to boost the ability of the US to produce critical pharmaceutical components.

Kodak’s Eastman business park in Rochester, New York, USA.

The money has come from the U.S. International Development Finance Corporation (DFC). It follows executive order 13922, signed by President Trump in May, which authorises the DFC and the US Department of Defense (DOD) to collaborate in support of the domestic response to CoVid-19 under the Defense Production Act (DPA). Essentially this is an attempt by the US government to bring back production of strategic resources to the US to and strengthen related domestic supply chains to help deal with the pandemic.

Dr Peter Navarro, assistant to the President and director of the Office of Trade and Manufacturing Policy at the White House, commented: “If we have learned anything from the global pandemic, it is that Americans are dangerously dependent on foreign supply chains for their essential medicines.”

Consequently, the new Kodak Pharmaceuticals division will produce critical pharmaceutical components that have been identified as essential but have lapsed into chronic national shortage, as defined by the Food and Drug Administration (FDA). Kodak has said it will coordinate closely with the government and pharmaceutical manufacturers to identify and prioritize components that are most critical to US national security. Although Americans consume approximately 40 percent of the world’s supply of bulk components used to produce generic pharmaceutics, only 10 percent of these materials are manufactured in the United States.

For now, the DFC has signed a letter of interest but Kodak still has to complete standard due diligence conducted by the agency before financing is formally committed. Kodak is the first company to receive this type of loan under the Defense Production Act and the company saw its share price rise sharply by 200 percent when the news broke. This led to the value of the company nearly tripling to almost $350 million. The loan itself has similar terms to commercial loans and will have to be repaid over 25 years. Jim Continenza, Kodak’s Executive Chairman, told the Wall Street Journal that pharmaceutical ingredients could eventually account for 30 to 40 percent of Kodak’s business. 

Kodak has said it will use the loan to repurpose and expand its existing facilities in Rochester, New York as well as St. Paul, Minnesota. According to Continenza, Kodak will produce starter materials and active pharmaceutical ingredients that can be used to produce generic medicines. In theory, Kodak will be able to produce up to 25 percent of active pharmaceutical ingredients used in non-biologic, non-antibacterial, generic pharmaceuticals. This should lead to around 360 new jobs directly and support a further 1,200 jobs indirectly.

Continenza commented: “Kodak is proud to be a part of strengthening America’s self-sufficiency in producing the key pharmaceutical ingredients we need to keep our citizens safe. He added: “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.”

This follows from a request by the DFC for proposals from private sector companies for projects that support the production or distribution of pharmaceuticals, personal protective equipment (PPE), medical testing supplies, vaccines, ventilation equipment, or relevant ancillary materials and technologies within the USA. You can find more about this program from dfc.gov/dpa and about Kodak pharmaceuticals from kodak.com.

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