Kodak’s last drug gambit hurt region
Company took jobs out of Rensselaer County after Sterling purchase
Kodak’s recent bungling of its blockbuster $765 million deal with the federal government to start making pharmaceuticals — an agreement that would create hundreds of jobs for the Rochester
area — comes three decades after the company’s previous venture into the drug business spelled disaster for the Capital Region.
Back in 1988, Kodak was billed as a “white knight” for acquiring Sterling Drug Co., which employed 1,300 people in Rensselaer County at the time, fending off a hostile takeover of Sterling by the Swiss drugmaker F. Hoffmann-la Roche & Co.
Although primarily known for its photo and film business, Kodak had developed hundreds of thousands of chemical compounds over the course of its history that it believed could be useful to the drug industry. It used the Sterling acquisition to gain a quick foothold into the pharmaceutical industry.
Sterling employees and local economic development officials were happy at first that Kodak had won the bidding on Sterling with a $5.1 billion offer, believing that Rochester-based Kodak would be more apt to maintain Sterling’s local research and manufacturing facilities in East Greenbush and Rensselaer.
But that optimism ended quickly when Kodak announced only a year later that it would be packing up and moving the whole operation to Pennsylvania.
“These are hundreds of people whose families have worked there generation after generation and I know personally,” then-east Greenbush Supervisor Michael Vanvoris said at the time. “We’re kind of shocked.”
Officials in Rochester were similarly taken aback last week when Kodak’s plans to relaunch its pharma business were put on hold by the Trump administration pending an investigation to unusual stock trading activity. Kodak’s shares soared from $2 to $40 late last month after Trump
announced the government was giving Kodak a $765 million loan to re-establish its drug division to help the U.S. maintain a domestic supply of certain drug ingredients. The deal would have created 350 jobs, mostly in Rochester, although some would be located in Minnesota.
Kodak said it is conducting its own review of stock trading by board members and executives using a newly formed board committee that will work with the law firm Akin Gump Strauss Hauer & Feld.
“The committee, comprised of directors Jason New and William G. Parrett, will oversee an internal review of recent activity by the company and related parties in connection with the announcement of a potential loan by the U.S. International Development Finance Corporation to support the launch of Kodak Pharmaceuticals,” the company said in a statement issued Aug. 7. It is unclear if the Trump administration would reinstate the loan and allow Kodak to move forward with its new drug unit if no wrongdoing is uncovered.
Back in 1989, Kodak similarly disappointed local officials. New York state couldn’t even convince Kodak to remain in Rensselaer County with a state incentive package that was valued at more than $100 million.
“Obviously we’re very unhappy about what happened,” the late Gov. Mario Cuomo said after failing to keep Kodak in the Capital Region. “We tried very hard. Sterling said that. Now we have to see what we can do for the people of Rensselaer (County).”
Kodak gave up on its initial foray into the pharmaceutical business back in 1994 when it sold the operation to Sanofi.
The East Greenbush site where Sterling had its research operations ended up eventually becoming a biotech hub, with the University at Albany locating its school of public health there. Several biotech firms have also set up shop there, including Regeneron Pharmaceuticals, which today employs more than 3,000 people locally and is growing with new facilities being constructed at another site not far away.