Once considered the king of photography and videography, Kodak’s downfall has been epic, like its rise. Kodak’s fall saga is being taught and studied worldwide to understand what can possibly go wrong for a company to lose everything. In 2012, things became exceedingly difficult for this pioneer in film and camera technology and it had to file for bankruptcy.
After being away from the news for many years, Kodak suddenly became the center of all the buzz. The US government under the Trump administration agreed to grant a loan of $765 million to enable it to produce active pharmaceutical ingredients for generic medications production.
This news surprised everyone, considering this company has a successful legacy in films and cameras and no experience in pharmaceuticals.
So, why a company that once held 90% film market and accounted for 85% of camera sales in the USA decided to step into the pharmaceutical industry? Can the company regain its world’s dominance?
Let’s explore everything in detail.
What Went Wrong With Kodak?
It would be no exaggeration to call the 20th century the era of the Kodak company. Kodak completely changed the game of photography by introducing inexpensive and easy-to-use cameras giving birth to amateur photography. The core business of Kodak was to sell films and print photos.
Kodak created the amateur photography market and held its dominance for decades until the 2000s when digital cameras were introduced. Ironically, Kodak engineer was the first to invent the digital camera in 1975. The company decided not to capitalize on the digital photography idea for fear of losing its dominance in film sales. Plus, over the years, the company perfected the chemistry required to create impeccable photographs, so any future without film photography did not seem something that matched well with the business model of Kodak.
This decision not to recognize change and transform the business as per the changing industry technologies and demand became the historic reason for the downfall of this empire. Once touted as one of the most successful companies with no parallels, the company had to even file for bankruptcy due to crippling financial situations with plummeting sales.
After the bankruptcy, Kodak tried to again set its ground and focused all its energies on high-speed digital printing technology for packaging consumer goods. It also had a brief stint in the crypto market in 2018, which surged its stock prices even.
Later in 2020, Kodak blew everyone off with its latest stunt of entering the pharmaceutical market amid the COVID-19 pandemic. The company also was able to obtain a promise of a loan from the US government to pursue its venture, Kodak Pharmaceuticals, for developing active pharmaceutical ingredients (APIs) for generic medications.
Now the question is, what’s the reason behind Kodak’s recent transitions to the pharmaceutical industry?
Why Is Kodak in Pharmaceuticals?
The COVID-19 pandemic created an acute shortage of drugs all over the world due to excessive demand. The United States of America was soon to realize how much it was dependent on the foreign supply chain from China and India to get pharmaceutical products and even active pharmaceutical ingredients. This concern made the Government urge the US Government to encourage the domestic production of drugs and pharmaceutical ingredients.
According to the officials at Kodak, the company is already making Key Starting Materials (KSM). Besides, it has the capacity and expertise to make APIs at its manufacturing facility, the Government aid can accelerate the production process.
It is important to note that Kodak is not new to this pharmaceutical business. Back in 1988, it bought Sterling Drug Inc in a bid to diversify its business amid stiff competition in the film market. On a side note, Sterling Drug was the manufacturer of Bayer Aspirin.
So, Kodak is not purely new in the pharmaceutical game. Plus, Kodak is not the only precedence of a photography company creating drugs. Fuji Film has now also become a prominent drug manufacturer in the USA, which also produced Avigan during the Ebola outbreak.
Kodak has worked with chemicals under a controlled environment for photochemical development processes, such experience can also come in handy in pharmaceutical development. Lastly, the company has the infrastructure of Eastman Business Park with equipment and safety, and security to expand the drugs business and make the USA self-sufficient.
Government Loan Controversy and Challenges For Kodak
To help the US government achieve its dream of making America self-sufficient in creating APIs to produce essential drugs, the US government agreed to grant a $765 million loan to Kodak Pharmaceutical. Under this loan, the company would start the production of APIs essential for generic drug production.
Unfortunately, the recent insider trading allegations led to an SEC probe on the matter against Kodak. This has put a halt to the Government’s interest in this new budding pharmaceutical venture.
Until Kodak does not clear its name, the deal with the government will not proceed.
Besides, there are other challenges that Kodak has to face if it wants to succeed in the pharmaceutical industry. The biggest is the stiff competition from foreign pharma companies like China and India, with cheaper labor and other costs.
Besides, the company needs R &D, expertise and equipment to produce KSMs and then to produce API. Of course, FDA approvals and CGMP compliance is other hassles that the company has to deal with.
Kodak Future | Final Thoughts
It is a bit of a learning curve that requires trial and error to make things work out. Still, it is not impossible to achieve this goal for Kodak, like FujiFilm, which had been the front runner in providing the substance needed to produce the coronavirus vaccine for Novavax.
Kodak has to first clear its name from the allegations to finally achieve some success in the pharmaceutical niche. For now, the US government has less trust in the company.
What do you think? Can Kodak be able to live its past legacy ever again?