29 July 2020 Business

Kodak returns to pharmaceuticals to ensure US supplies

The pandemic has exposed the fragility of global supply chains in all areas. Now the US government is helping Kodak invest to protect the production of generic medicines through investment in facilities to make medicinal compounds.

Kodak is returning to the pharmaceutical business, more than 25 years after selling its ownership of pharmaceutical manufacturer Sterling.

Kodak Pharmaceuticals will set up a unit in Rochester to produce pharmaceutical compounds that are defined as “essential but have lapsed into chronic national shortage.” These are standard components used to produce generic medications that are now produced in bulk outside the US. The US Food and Drug Administration reckons that Americans consume 40% of the world’s supply of these bulk components, but only 10% are manufactured in the US.

US companies have instead focused on original treatments and medicines where the profit margins are high, at least while protected by patents. The ongoing pandemic in the US has, however, underlined the importance of local sourcing to create a national stockpile of standard pharmaceutical compounds in the US for security of supply of basic drug treatments.

Kodak has been able to produce PPE and disinfecting hand wash using experience in working with acetate films and chemicals during the current crisis. Now the opportunity exists to use the company’s experience in producing speciality chemicals to good effect.

Executive chairman Jim Continenza says: “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 Pharmaceuticals will be set up with a government backed loan of $765 million to support the start up costs of repurposing and expanding facilities in Rochester, Kodak’s home city, and St Paul, Minnesota. The new division will employ 360 and will have capacity to produce 25% of the active pharmaceutical ingredients used in non biologic, non antibacterial, generic pharmaceuticals.

Kodak's last excursion into drug production was through ownership of Sterling Pharmaceuticals which it bought for $5.1 million in 1988. The aim was to exploit the potential of some 500,000 chemical compounds that Kodak had developed over the years, using Sterling's experience to take these to market. However, as the company started to feel the pressure from the transition away from film, it sold the first the prescription medicines arm and then the over the counter medicines business in 1994. It laster sold its diagnostic imaging business, that had moved from X-ray films to digital imaging, in 2007. It continues to produce X-ray films.

While the loan to Kodak was made as a result of a presidential order, President Trump did not visit Rochester for the ceremonial signing of the letter of intent. He did, however, visit facilities for Fujifilm Diosynth Biotechnologies in North Carolina to view progress on developing a Covid-19 vaccine and to back plans to accelerate production of millions of doses of the vaccine at a plant in Texas.

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Kodak is back in the drugs business

Kodak is back in the drugs business

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