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Kodak: How the Company Plans to Shift From Cameras to Pharmaceuticals

Lily Wolfson ’21

Pharmaceuticals will eventually make up 30% to 40% of the company (Photo Credit: Forbes)

In the 1970s, Kodak was the optimal brand in the American photography market, comprising 85% of camera sales and 90% of film sales. The company’s share price steadily increased and peaked in the 1990s but shortly plummeted due to the emergence of digital photography.

By 2012, the company filed for bankruptcy. At the end of 2013, Kodak came out of bankruptcy as a much smaller brand.

Now, in 2020, the pandemic has allowed for a new opportunity to emerge, granting Kodak a chance to revitalize its business. On July 28, President Donald Trump announced a $765 million loan for the launch of Kodak pharmaceuticals. “Kodak will now produce generic, active pharmaceutical ingredients,” Trump said. It will be an effort to domesticate the production of up to 25% of the pharmaceuticals taken by Americans, as the United States is currently reliant on China for most of its pharmaceutical ingredients.

Many were skeptical following the announcement of this seemingly unprecedented endeavor, but for the company, it makes sense: much of the analytical chemistry required in the film industry is applicable to making high purity chemicals. Kodak expects pharmaceuticals to eventually comprise 30% to 40% of its operations.

The company already has experience with pharmaceuticals. In 1988, Kodak acquired Sterling Drug Inc. for $5.1 billion. The company later sold Sterling to SmithKline Beecham to focus on its photography-oriented operations.

Throughout the pandemic, Kodak has been producing face shields, hand sanitizers, and parts of ventilators. However, the loan would kickstart a colossal expansion of that apparatus of Kodak. The company would be producing ingredients for pharmaceuticals that the FDA has rendered essential and in national shortage. At the company’s facilities in Rochester, New York, Kodak would produce key starting materials (KSMs) and active pharmaceutical ingredients (APIs).

The $765 million was not a sealed deal, but rather a mere Letter of Interest, rendering the proposal non-binding. On August 4, the loan was placed on hold due to raised suspicion over disclosure of the deal, which thereafter prompted the launch of an SEC investigation. The DFC also specifically cited concerns of insider trading. The loan and deal will be on hold until the allegations are cleared.

Before the July 28 announcement of the loan, Kodak was valued at no more than $112 million. The announcement skyrocketed Kodak’s stocks, with the company’s potential value jumping to about $4.5 billion. However, Kodak’s stock still moved drastically a day before the government deal was announced.

The day before the general public was alerted of the deal, Kodak sent a press release to a few local news outlets in Rochester. Kodak said that the company had intended for that press release to have an embargo time, but because it did not include one, many journalists published the news.

Though the stories were rescinded shortly after publication, the news had already reached the masses. Kodak’s trading volume went from 117,000 shares on July 20 to 1,600,000 shares on July 27, one day prior to the announcement. This mishap piqued an SEC investigation into the company’s disclosure of the $765 million loan.

Much suspicion also arose about potential insider trading and Kodak’s executive compensation practices. Documents show that Kodak’s executive chairman and one board member bought Kodak stock a month prior to the announcement while negotiations for the deal were occurring. The loan is currently on hold for an indefinite period. Even if the $765 million loan goes through, Kodak will potentially face obstacles establishing legitimacy in the pharmaceutical market.


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