Kodak (KODK) – who returned to the spotlight via a multi-million deal with federal government to make medical ingredients — is more associated with the chemicals than the cameras and photos that made him famous, CEO Jim Continenza told Yahoo Finance on Wednesday.
Shares of the company soared more than 500% during the day, taking Wall Street by surprise after stagnating in recent years. Kodak was once a household name, but the digital revolution that has transformed smartphones into cameras has made it an obsolete brand for the most part.
That all suddenly changed this week, when the Trump administration reinforced its commitment to ending reliance on global supply chains for pharma drugs – granting Kodak a loan of 765 million dollars manufacture Active Pharmaceutical Ingredients (API) domestically.
According to Continenza, Kodak’s change should come as no surprise. “We really didn’t make cameras, we made films. We’ve always been a chemical and chemical (business),’ he told Yahoo Finance in an interview.
In fact, Kodak has already been producing APIs for two years and could not have increased production with existing capital alone, he explained. The government loan has a maturity of three years and is a step towards increased production.
“We are not against the supply chain”
The Trump administration has frequently called for more domestic manufacturing due to the disruption of global supply chains, targeting China squarely. Although the Kodak chief supported the status quo, he stressed the need to manufacture essential ingredients on American shores.
“We’re not against the global supply chain,” Continenza said. “What we want is to make sure America has all the medicines it needs, especially essential medicines, to sustain life in America.”
Continenza said the company’s robust manufacturing infrastructure reduces start-up time. And since the contract calls for Kodak to support 25% of US API needs, this will require upgrading in the process by relying more on technology.
“We’re going to move from batch manufacturing to continuous manufacturing, to reduce that cost,” Continenza said, adding that the process change and lower hiring requirements — less than 400 new jobs as a result — will help maintain the competitiveness of the company. .
Additionally, Kodak will enter into several supply agreements with other companies that may support other parts of the drug manufacturing process. But where these others stand and what input the government has in the process remains to be seen.
And the timeline won’t be immediate, with Continenza stressing that it will be “gradually rolled out over the next three and a half years”.
Kodak shares soared on Wednesday, hitting a high of $53 after trading mostly around $2 per share for the past year.
Despite the good news, there have already been concerns about suspicious transactions before the announcement. The news was made public on Tuesday, but Kodak shares started to climb on Monday.
Continenza told Yahoo Finance that the company did its best to keep things private.
“(The stock) was only up 20-30 cents on Monday, that wasn’t the leak of the century,” he joked. The executive added that the stock had moved more dramatically following the announcement by the US International Development Finance Corporation (DFC).