Eastman Kodak will receive a federal loan of $765 million to help reduce the country's reliance on other countries for ingredients used in generic drugs.
The plan is to create a Kodak Pharmaceuticals division, adding 300 jobs in Rochester, N.Y., and 30 to 60 jobs in St. Paul, officials told the Wall Street Journal.
The division would produce ingredients for generic drugs, including the antimalarial drug hydroxychloroquine that President Donald Trump has touted in the treatment of coronavirus, the report said.
Shares of the one-time photography giant, based in Rochester, more than tripled on the news of the loan from the U.S. International Development Finance Corp.
Kodak has branched out to offset the large-scale loss of its film business. Adam Boehler, who leads the IDF, said he learned that the company was interested in creating a startup that could supply ingredients for pharmaceuticals.
"If you look at drugs, 90% of the drugs that we take today are generics, and they are almost all made overseas," Boehler said in an interview on CNBC. "The dominant manufacturer of ingredients for generics is China, and No. 2 is India. And so, we said if we're going to re-shore and bring things back and we're going to have safety and security going forward, we need to change that."
Boehler said the agreement also will create 1,200 jobs in the construction and revamping of facilities.
Kodak Pharmaceuticals will make critical pharmaceutical ingredients that have been identified as essential but have lapsed into chronic national shortage, as defined by the Food and Drug Administration.
The government loan will help to support startup costs needed to repurpose and expand Kodak's existing facilities in Rochester and St. Paul.
It is the first use of new authority delegated by Trump's recent executive order that allows the DFC and the Department of Defense to collaborate in support of the domestic response to COVID-19 under the Defense Production Act.
"Addressing the unprecedented challenges we face today — and preparing for future crises — requires innovative ideas and partnerships," Boehler said in a statement.
"Today, we are bringing together the significant resources and expertise of the private sector and U.S. Government. We are pleased to support Kodak in this bold new venture. Our collaboration with this iconic American company will promote health and safety at home and around the world."
Kodak was a company built on film, which pivoted to digital photography and graphics and became much smaller. But producing film and related products also required chemical manufacturing.
"Kodak is proud to be a part of strengthening America's self-sufficiency in producing the key pharmaceutical ingredients we need to keep our citizens safe," said Kodak Executive Chairman Jim Continenza. "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."
Once fully operational, Kodak Pharmaceuticals will have the capacity to produce up to 25% of active pharmaceutical ingredients used in non-biologic, non-antibacterial and generic pharmaceuticals, officials said in the government release.
The company plans to coordinate closely with the Trump administration and pharmaceutical manufacturers to identify and prioritize components that are most critical to the American people and U.S. national security.