Camera maker Kodak dives into drug manufacturing with $765M federal loan

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Kodak, once known for its cameras, will now enter drug manufacturing. (Pixabay)

With COVID-19 straining international relations over the supply of needed generic medicines, the U.S. has scrambled to pump up domestic production of those key drugs. Now, the government is making a big splash to bring a well-known brand into the drug space—and it's not who you would expect.

Eastman Kodak, famous for its cameras, will now enter the drug manufacturing industry. With a $765 million federal loan under the Defense Production Act, the company will scale production of active pharmaceutical ingredients (APIs) for key generic medicines, the U.S. government said in a release.

The loan, funded by the U.S. International Development Finance Corporation (DFC), will cover Kodak's starting costs in repurposing existing facilities in Rochester, New York, and St. Paul, Minnesota, to incorporate "continuous manufacturing and advanced technology capabilities," the government said.

The cash infusion will likely add 360 additional workers and indirectly employ another 1,200, according to a release. Kodak's share price skyrocketed on the heels of Tuesday's news, jumping from $2.62 per share to $43.45 at its peak—an astronomical 1,558% increase.

The massive investment in Kodak—a company that filed for bankruptcy in 2012—comes after President Donald Trump in May ordered the DFC to pursue loan agreements that would help "onshore" manufacturing for generic medicines in chronic shortage because of the COVID-19 pandemic.

The DFC said Kodak would be capable of producing "up to 25% of active pharmaceutical ingredients used in non-biologic, non-antibacterial, generic pharmaceuticals" when running at full speed.

While the DFC didn't specify which drugs would rely on Kodak's API, The Wall Street Journal reported the deal could include production of once-hyped COVID-19 hopeful hydroxychloroquine (HCQ).

The longtime generic antimalarial has shown mixed at best results in treating COVID-19 patients, with at least two major randomized studies showing no benefit in patients treated with a solo regimen of HCQ. Other generics makers—including Novartis, Teva and Mylan—previously promised hundreds of millions of doses of the cheap generic for global supply but have since found limited buyers after global health authorities pulled out of large-scale studies.

A spokesperson for Kodak could not be reached for comment.

RELATED: It's the end of road for hydroxychloroquine in COVID-19 as Novartis, NIH and WHO pull out of trials

However, HCQ in recent weeks has reemerged as a political flashpoint among Trump's supporters, with the president's surrogates flooding cable news networks to tout the drug's benefits and Trump himself flogging HCQ in shared posts on his Twitter page.

During a coronavirus press briefing Tuesday, Trump didn't specify whether Kodak would produce the API for HCQ in prepared remarks.

The government's move to shore up domestic drug manufacturing is part of a concerted effort to end the nation's perceived over-reliance on APIs and finished generic medicines produced abroad, particularly in China and India.

RELATED: Trump picks little-known U.S. firm to spearhead $354M pandemic drug pact

Back in May, the Trump administration floated a four-year, $354 million contract with a fledgling company, Phlow Corporation, to build a generic medicine and API plant in Richmond, Virginia, and supply COVID-19 treatments produced there.

That deal was awarded by the Department of Health and Human Services' Biomedical Advanced Research and Development Authority and could be expanded up to 10 years and to a total of $812 million, among the largest agreements ever signed by the authority.

Phlow teamed up with Civica Rx, a generics maker started by hospitals fed up with rising drug prices, and API supplier AMPAC, among others. The Civica Rx partners will manufacture the finished dosage forms of essential medications, including vials and syringes.

RELATED: U.S. seeks to 'onshore' drug production in response to COVID-19. Is pharma even interested?

Despite the government's gung-ho push for domestic production, the industry has shown some pushback to Congress' most aggressive efforts to move manufacturing stateside.

In early June, the Pharmaceutical Research and Manufacturers of America, the industry's biggest lobbying group, said legislation calling for a wholesale shake-up of the industry's supply chain was "impractical and likely not feasible."

"Policymakers must take a long-term, more holistic look at global pharmaceutical manufacturing supply chains before jumping to rash proposals that may cause significant disruptions to the U.S. supply of medicines," a spokesperson said at the time.

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