The erstwhile Camera manufacturing giant Kodak has decided to venture into the drug-making business. The development has come after the United States President Donald Trump announcing that the company will produce ingredients used in generic drugs to support the fight against COVID-19.
Kodak has reportedly taken a loan of $765 million from the US International Development Finance Corporation to help its transition from Camera manufacturing company to pharma manufacturer. As per the deal, the loan must be paid off within 25 years.
Step to curb pharma imports from China
The decision is aimed at curbing US reliance on generic medicine from China, the country Trump has accused of spreading COVID-19. "We must never be reliant on a foreign nation for America's medical or other needs," said Donald Trump. In a press conference, the US President further added, "Our 33rd use of the defense production act will mobilize Kodak to make generic, active pharmaceutical ingredients. We will bring back our jobs and we will make America the world's premier medical manufacturer and supplier." Trump also mooted development as one of the most important deals in the history of US pharmaceutical industries.
Pharma to account for 30% to 40% business of Kodak: CEO
The Chief Executive Officer (CEO) of Kodak has expected the Pharma component to make up to 30% to 40% of the company's overall business. After creating the first self-contained compact camera, Kodak's slowness in moving to digital imaging contributed to financial difficulties for the company in the late 1990s. In 2012, the firm filed for bankruptcy proceedings under Chapter 11 and turned its focus on commercial printing and consulting services.
After several years of underperformance due to regulatory and price problems, after the emergence of the novel coronavirus, which has taken more than 6.5 lakh lives worldwide, the pharmaceutical industry has resurrected. As per a report in Moneycontrol, In India, on a year-to-date basis, the Nifty Pharma is up over 27 percent. Given the dramatic spike, analysts believe that there might still be some gasoline left on the rally. Umesh Mehta, Head of Research, Samco Group contested, "Pharma stocks have witnessed a brief halt/pullback towards short-term moving averages, and however, the trend is still positive. Some of the players are starting their next up leg."