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From Film to Pharma

Think Kodak, think Cameras & Reel! However, Kodak is now a Pharma Company.


In the late 1900's Kodak captured around 90% of the film and more than 80% of the camera market in the US. It bet big on reel sales and hoped that would continue in perpetuity. Kodak had a dream run until the point where digital photography started to turn the tide.


In 2012 January, the company filed for bankruptcy to survive the liquidity crisis. This has been long in the pipeline as they had declining sales and revenues. It was at this juncture when Kodak announced that it would radically refocus its business strategy. The pioneer of the popular photography era had experience with chemicals. But having invented the digital camera only to remain wedded to its once lucrative film business, Kodak had also become a byword for missing the boat.


In 2013 a much leaner and focused company was born. The focus had changed to high-speed digital printing technology and flexible packaging for consumer goods. However this was not the only time they pivoted.


In 2018, Kodak had yet again shrunk, this time to a small commercial imaging company with a record of losses, despite faddish ventures such as a “photocentric cryptocurrency” called Kodak Coin.


With the latest threat in the form of Covid-19, businesses were impacted across all sectors, and that is the reason Kodak decided to take a shot at a new business altogether. This time it was with the help of the Defence Production Act which would provide $750+million loan to launch Kodak Pharmaceuticals.


This move is not unfounded, as Kodak will produce active pharmaceutical ingredients. They would leverage their learning that was required in the process of film making and use those chemical techniques to create high purity chemicals.


However, the loan is now on the ice and the stock has tumbled after the DFC claimed that it had serious concerns about unstated allegations of this infringement.


The issues that deserve further analysis and scrutiny from the officials:

  • Why did authorities choose Kodak over more experienced and well established pharmaceuticals? Even though there were speculations already rife about whether Kodak had the ability to continue, this very concern was overlooked and the initial deal sanction verdict was issued.

  • What role did the reported surge in Kodak’s lobbying spending play in convincing politicians to transform its fortunes in such spectacular fashion?

  • Kodak's sudden increase in share prices do deserve equal attention.

  • Just before the big news broke out in the media, the market witnessed shocking results as the stocks increased unexpectedly.

Was that anything more than the kind of heedless mistake a drug ingredient company is not supposed to make?

  • Investors need an explanation for the unexpected profits executives made on the shares they bought or were granted strikingly close to the deal-announcement that perhaps stood to transform the company’s valuation.

  • What made the stocks instantly profitable, was the decision to award Jim Continenza, Kodak’s CEO 1.75 million stock options the day before the announcement. The Kodak team was well aware of the fact that stocks which were purchased in June'20, rocketed in value to US$2.8 million at the peak.

  • The higher management emphasized on the fact that their CEO had spent more on the organization itself than he has earned from it, and the award's timing was just a technicality as this was an usual business-exercise.

  • What's strange is that, more than a quarter of his options were made exercisable immediately, which makes the stocks look like a gift to management, not an incentive to align the company's interests with long-term shareholders’.

  • Apart from these much-talked about stocks, a whole lot of investors on Kodak's board and shareholders have enjoyed substantial paper gains. Adding onto that, the tax benefits they received is another question that has cropped up before the investigators.

Although the shift to pharmaceutical manufacturing may seem incongruous to those who recall Kodak Moments,but as a matter of fact the company has been producing photographic chemicals for decades now.


Will Kodak’s new mission work?

In Kodak's defense Fujifilm has been Kodak's main nemesis in the photography space for a long time, and they successfully pivoted into pharmaceutical manufacturing many years ago. Currently they are a prominent manufacturer of both precursors and pharmaceuticals in the United States.


If we tend to lay out the comparison and establish facts, many years ago when Fujifilm got into the pharmaceutical industry, they still had many of their innovative folks working in photo-chemistry, still employed at the company.


Hence it's clear that for Kodak to pivot to the pharma industry many years ago, would have been a great idea as well.


Let us see how Fujifilm has proved far more adept at reinventing itself than its American counterpart.

  • Kodak did invent the first digital camera in early 1975 but the company failed to truly recognize the technology's potential and what it had to offer, on the contrary Fujifilm was quicker to pivot to digital, introducing the world's first digital portable camera in 1988, and the Japanese firm was faster to diversify away from photographic film.

  • Even on the pharmaceutical front, Fujifilm is also several steps ahead of Kodak. Health care and material solutions made up 43% of Fujifilm's total revenue in 2019, and the company aims to double its health care sector sales over the next few years.

  • To strengthen the argument further, since 1986 Fujifilm has acquired several more pharmaceutical and biotechnology companies and established itself as a major producer of medical equipment and drugs.

  • It was in 2006, it bought the company that became the drug-maker Fujifilm Toyama Chemical, which developed the antiviral Avigan, an early contender in the race to develop a COVID-19 treatment which according to Inconclusive clinical studies conducted in early July'20 has clearly proved to be not that useful.

  • Fujifilm recently announced that, its Texas site will support production of a corona-virus vaccine candidate under the Operation Warp Speed, a U.S. government COVID-19 vaccine development program.

The investigation is still under progress. However, what is known for a fact is that Kodak's reputed government funded reinvention appears to be in a complete hotfoot.


Nevertheless, It would be worth witnessing if its attempt to reinvent itself as a key link in the U.S. pharmaceutical supply chain survives unscathed.


It has been a long time since Kodak was an icon of U.S. innovation, consumer insights and branding brilliance. These traits are still engraved in deeper roots of native America where organizations embrace the needs of the stakeholders wider than the shareholders alone!


What if the deal dies? It is a question to be thought about.

  • Kodak’s pivot to pharma may be remembered only as a brief flurry of strange summer headlines.

  • But the questions to which lawyers and lawmakers want answers deserve closer attention, as they illuminate much about the interplay of business and government in the Trump era.

Future Scope :

  • The biggest challenge for Kodak will be competing with a foreign pharma market, where labor costs are cheaper and regulation laxer. Unless there is a line-of-sight that there's willingness to absorb that additional cost in order to be self-reliant as a country.

  • To be honest it will be hard to see a lot of players in the industry jump in.

Even if you support that shift in corporate culture, however, it is important to remember case studies like Kodak. At a time when companies are realizing that they must work more closely with politicians to rebuild from the COVID-19 crisis, it looks clear that many of those collaborations could have varied results. It is such glimpses of more opportunistic forms of public-private partnership that weigh on public trust in both government and business. But in hindsight, It might be due to these challenges that the government itself is reluctant to put all of its eggs in one basket. The idea all along was to give loans to a number of companies in an effort to bring generic drug production back to the U.S. market.



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