Kodak to help produce pharmaceuticals with loan from government

Company will focus on ingredients used to make generic drugs.

In a deal aimed at reducing U.S. reliance on China, the federal government announced Tuesday that it plans to give Eastman Kodak Co. a $765 million loan to start producing the chemical ingredients needed to make pharmaceuticals.

The company plans to establish a new division, Kodak Pharmaceuticals, that will focus on the building blocks used to produce generic drugs, according to a joint statement from Kodak and the lending agency, the U.S. International Development Finance Corporation, or DFC.

The planned investment, reported earlier by the Wall Street Journal, will create about 350 jobs at Kodak’s home base in Rochester, N.Y., and in St. Paul, Minn., the company said.

DFC normally funds infrastructure and other projects in the developing world. But in an executive order signed in May, President Donald Trump gave DFC new powers under the Defense Production Act to finance domestic health-care manufacturing needed to respond to the coronavirus crisis.

Shortages of face masks and other protective equipment for doctors and nurses have raised concerns in recent months about U.S. reliance on China and India for pharmaceutical ingredients and finished medicines. About 40% of the world’s supply of drug ingredients is used to produce generic medicines for Americans, but only 10% these materials are manufactured in the United States, according to DFC.

The aim is “to re-shore critical industries so if we ever end up in a situation like this again we are not relying on China or others,” DFC chief executive Adam Boehler said in an interview.

“It’s a breakthrough in bringing pharmaceutical manufacturing back to the United States,” Trump said of the deal during a coronavirus briefing, calling it his administration’s 33rd use of the Defense Production Act.

Boehler signed a preliminary agreement with Kodak Executive Chairman Jim Continenza on Tuesday to provide the loan, which is still subject to final DFC due diligence, a Kodak spokeswoman said.

In an interview, Continenza said Kodak has more than 130 years of experience manufacturing chemicals, which the company has used to make film and other products. “We are truly doing this to help tighten and fix the supply chain of pharmaceuticals in America,” Continenza said, adding that U.S. reliance on imported ingredients is worrying. “I have kids, and they’re going to have kids . . . . We cannot have this,” he said.