Photography company Kodak (KODK) won a $765 million government loan on Tuesday to enable it to begin shifting its focus to domestic drug production. The U.S. Internal Development Finance Corp. said the loan provided under the Defense Production Act will go toward the creation of Kodak’s newest arm, Kodak Pharmaceuticals.
“At the direction of President Donald J. Trump, U.S. International Development Finance Corp. Chief Executive Officer Adam Boehler will today sign a letter of interest to provide a $765 million loan to Eastman Kodak Co. to support the launch of Kodak Pharmaceuticals, a new arm of the company that will produce critical pharmaceutical components. The project would mark the first use of new authority delegated by President Trump’s recent executive order that enables DFC and the U.S. Department of Defense to collaborate in support of the domestic response to COVID-19 under the Defense Production Act,” the announcement said.
Under the loan, Kodak will begin production of ingredients for generic drugs for distribution inside the U.S. Among the drugs Kodak will be producing is the antimalarial drug hydroxychloroquine, which President Trump has continued to push as a treatment for coronavirus despite concerns from Dr. Anthony Fauci and the Center for Disease Control and Prevention about the drug’s effectiveness and safety.
It also represents a much needed economic boost for Kodak, which has struggled over the last few years. Kodak previously filed for bankruptcy in 2012 as digitial photography was growing in popularity thanks to digital cameras and smartphones, resulting in reduced demand for the film and film cameras Kodak built itself on. It emerged from bankruptcy in 2013, but was forced to drop several businesses and legacy liabilities in order to survive.
White House staff celebrated the new partnership, saying it will help reduce U.S. reliance on importing pharmaceutical drugs and ingredients from overseas.
“If we have learned anything from the global pandemic, it is that Americans are dangerously dependent on foreign supply chains for their essential medicines,” White House trade adviser Peter Navarro said. “This … partnership is a big win for the use of President Trump’s DPA powers, a big win for New York and a huge step forward towards American pharmaceutical independence.”
Navarro said at least 30 other companies are currently being considered for additional DPA funding.
Kodak stock was up 234% at $8.75 at 12:13 p.m. EDT.