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Kodak Stock Up More Than 1,000% On Deal To Produce Generic Drug Ingredients

By David Butler – Jul 29, 2020 at 10:38AM

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The camera giant has been awarded a huge government loan aimed at reducing U.S. reliance on foreign pharmaceutical supply.

Eastman Kodak (KODK -0.69%), the beleaguered film company that was forced into bankruptcy as digital cameras took over the world, has found a new business entirely. The stock skyrocketed today on news that it was awarded a government loan for $765 million under the Defense Production Act to help the company begin producing generic drug ingredients.

It's a surprising turn for what was primarily a photography-based business. The deal is a play on improving America's ability to rely on domestic production of pharmaceutical products amid the coronavirus pandemic. Kodak's facilities in Rochester and St. Paul, Minnesota are the focal points of the new pharmaceutical side of the business which will be called Kodak Pharmaceutical. Kodak said it will focus on making essential ingredients that the Food and Drug Administration has identified as there being a national shortage of.

Drugs and a bottle

Image Source: Getty Images

Some analysts are questioning the move, wondering why the deal wouldn't have been given to a company already involved in the pharmaceutical industry. President Trump may have held a preference for a producer outside of the current drug regime. Political tensions have increased this week, as pharma executives and analysts react to Trump's recent executive orders that aimed to lower drug prices.

Whatever the reasoning, it's a fascinating chance for Kodak to make a new start, and investors have reacted bullishly. So far this week, the stock is up around 1,150%. The company came out of bankruptcy in 2013 and has struggled to grow over the last five years. Moving into a field like drug sales could provide a good avenue for the photography pioneer.

David Butler has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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