In one of the most miraculous reversals of fortune in modern corporate history, Eastman Kodak has been thrown a $1 billion (US$765 million) lifeline by President Donald Trump to establish a generic pharmaceuticals industry in the US.
‘What we have with this project and Kodak may be one of the greatest second acts in American industrial history,’ said Peter Navarro, Assistant to the President and Director of the Office of Trade and Manufacturing Policy. (He must be one of the few people in the world to have read Eastman Kodak’s last financial report!)
The impact on the Kodak share price has been breathtaking. For the past six months it has been flat-lining just above $2. At time of writing, it is $33.20! While the pending deal with the US Government is all about pharmaceuticals, Kodak’s new-found financial health has major implications for the photographic industry as well – not the least of which has been to save Eastman Kodak from slipping back into bankruptcy.
‘Today I’m proud to announce one of the most important deals in the history of US pharmaceutical industries,’ President Trump told media in the White House briefing room on Tuesday afternoon. ‘It’s a breakthrough in bringing pharmaceutical manufacturing back to the United States.’
The loan will come via the Defense Production Act and from the US International Development Finance Corporation (DFC), set up to provide loans for overseas projects to counter China’s neo-colonial ‘Belt and Road’ program. Final agreement is yet to be confirmed. The announcement so far is of a ‘Letter of Intent’ between Eastman Kodak and the DFC. The LOI indicates Kodak’s successful completion of DFC’s initial screening and will be followed by standard due diligence conducted by the agency before financing is formally committed.
It will see Kodak manufacture pharmaceutical ingredients, including those for hydroxychloroquine. The plan is for Kodak to produce 25 percent of the pharmaceutical ingredients for all non-biologic and non-antibacterial pharmaceuticals used in the United States. While 90 percent of prescriptions in the US are for generic drugs, less than 10 percent of the active pharmaceutical ingredients for these generics sold in the United States are made there, with ‘more than 50 percent made in India and China,’ President Trump said.
‘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,’ said Eastman Kodak executive chairman Jim Continenza. ‘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.’
‘If we have learned anything from the global pandemic, it is that Americans are dangerously dependent on foreign supply chains for their essential medicines,’ said Peter Navarro. ‘This DFC-Kodak partnership is a big win for the use of President Trump’s DPA powers, a big win for New York, and a huge step forward towards American pharmaceutical independence.’
The DFC loan will accelerate Kodak’s time to market by supporting startup costs needed to re-purpose and expand the company’s existing facilities in Rochester, New York and St. Paul, Minnesota, and create 360 jobs.
Now read: Lucky Jim!