U.S. tech company Eastman Kodak, best known for its role in the development of photography, has been awarded a $765 million government loan under the country's Defense Production Act. The substantial loan is meant to bolster the company's ability to produce chemicals and ingredients used in generic medications.
On Tuesday, President Donald Trump announced that the government had closed a deal with the photography pioneer to boost the nation's supply of drugs in response to the extended coronavirus pandemic. The news immediately resulted in Kodak's share prices skyrocketing more than 60 percent during extended trading.
Kodak's shares prices closed at around $2.62 per share on Monday. It then more than tripled in value on Tuesday, reaching a high of $10.94 per share before closing at $7.94 per share. This marked the stock's best single-day increase since it went public.
The surge in its stock prices pushed the company's market valuation to around $347 million. This was a big jump from its $115 million market valuation prior to Tuesday's rally.
Trump mentioned during a press conference on Tuesday that the deal marks the 33rd use of the Defense Production Act. The deal is expected to greatly enable Kodak to produce mass quantities of necessary ingredients to produce generic medicines. Trump added that the loan should also result in new jobs, while also bringing the country closer to becoming a global drug manufacturing leader.
According to Kodak, the company will mainly be using the funds to enhance its manufacturing facilities to produce pharmaceutical components that are in extremely short supply. The company stated that these ingredients, deemed by the U.S. Food and Drug Administration (FDA) as being in dangerously short supply, are essential in manufacturing generic drugs that treat hundreds of different diseases and ailments.
Kodak revealed that its first move will be to expand its existing manufacturing facilities in New York and Minnesota, which are both operated by its medical subsidiary Kodak Pharmaceuticals. The company's executive chairman, Jim Continenza, mentioned in a separate statement that Kodak is proud to be part of the nationwide effort to ensure the country's self-sufficiency in manufacturing world-class medical products. He added that the company should be able to leverage its years of innovation and experience, its vast infrastructure, and its commitment to quality to achieve its mission.
Since it went bankrupt in 2012, following the emergence of digital camera technologies, Kodak has shifted its business to other industries such as drug production. The company has so far found some success, allowing it to survive even with the minimal revenues it was generating from its core photography business.
