Kudos to Kodak on Finding a Viable Industry to Operate In

  • Kodak received a $765 million loan to launch a pharmaceutical division.
  • It could grow to 35-40% of the company in short order.
  • It makes the prospect of another bankruptcy unlikely.

Shares of Eastman Kodak Company (NYSE:KODK) shot up over 200% Tuesday and are up triple-digits again today. Why? Because the company, best known for being in the photography business, has now received a lifeline from Uncle Sam to manufacture drug ingredients at home.

Kodak Becomes a Repatriated Supply Chain Story

The government, via the Development Finance Corporation, provided Kodak with a $765 million loan. That’s an amount of money higher than the company’s market cap before the deal was announced, which explains a big chunk of the rally in shares this week.

Shares have exploded higher over the past two days as Kodak received a $765 million loan to build a drug manufacturing division. | Source: Yahoo Finance

The purpose of the loan is to allow Kodak to develop a new line focused on producing critical pharmaceutical components.

The deal is part of a broader Defense Production Act order designed to ensure that critical items are produced domestically for national security reasons. That order came about as it was revealed that most drug manufacturing came from China. The exact numbers are hard to tell, as even organizations such as the FDA can’t provide a specific answer.

President Trump, who has repeatedly called for repatriating American manufacturing in China, and who had started to see a rise in manufacturing jobs domestically at the start of the year, took a victory lap in a press conference on Tuesday:

Today, I’m proud to announce one of the most important deals in the history of U.S. pharmaceutical industries.  My administration has reached a historic agreement with a great American company — you remember this company; it’s called — from the good, old camera age, the old days — to begin producing critical pharmaceutical ingredients. …

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