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Kodak gets massive state-backing from the Trump administration to manufacture generic drugs inhouse and reduce its dependency on sourcing APIs from China.
From making camera lenses to making drugs, Eastman Kodak is all set to be back in the market! On Wednesday, July 29, Eastman Kodak Company (NYSE: KODK) stock saw a massive rally jumping over 300% in a single day.
The massive Kodak stock rally comes as U.S. President Donald Trump announced a complete makeover of the company to now being a pharmaceutical producer. On Tuesday, the Trump administration announced a whopping $765 million loan to Kodak Pharmaceuticals.
Kodak will now start producing active general pharmaceutical ingredients under the Defense Production Act. This move also aims to reduce America’s dependency on foreign drug makers. During a press conference on Tuesday, President Trump said:
“Our 33rd use of the Defense Production Act will mobilize Kodak to make generic, active pharmaceutical ingredients. We will bring back our jobs and we will make America the world’s premier medical manufacturer and supplier.”
On Wednesday, the Kodak stock witnessed wild trading during the market hours. Besides, trading on the New York Stock Exchange was halted 20 times due to massive volatility.
Kodak, who pioneered the camera and the photography market in the 90s, had filed for bankruptcy in 2012. Later, it restructured its operations to become a materials and chemical company. Kodak already manufactures some key materials for some pharmaceuticals and is looking to expand its capacity further.
Kodak CEO Jim Continenza told CNN that the company will take 2-3 years to build the new capacity. Besides, with such massive funding coming directly from the government, Kodak can also fast-track its development.
Kodak Stock Jumps Over 2000% in Less Than a Week
The Kodak stock has undergone a massive rally just in the last five trading sessions. If we just see the 5-day chart, the Kodak stock has surged from $2 to more than $46 on Wednesday.
Kodak ended its Wednesday’s trading session up by $25 or 317% at a closing price of $33.20. From just $150 million market cap, the company’s valuations have soared to above $1.45 billion. Speaking to CNBC, Kodak Executive Chairman Jim Continenza said:
“Kodak is proud to be a part of strengthening America’s self-sufficiency in producing the key pharmaceutical ingredients we need to keep our citizens safe. By leveraging our vast infrastructure, deep expertise in chemicals manufacturing, and heritage of innovation and quality, Kodak will play a critical role in the return of a reliable American pharmaceutical supply chain.”
The coronavirus pandemic has put America against the toughest healthcare challenge over the last decade. America which is a big market for the generic drug players doesn’t make most of the API’s on the homeland. On the other hand, drug makers have turned to largely low-cost countries like China and India.
The generic drug shortage during the pandemic has got the Trump administration to re-think on setting up new facilities inhouse. While testifying before the House committee last year, FDA official Dr. Janet Woodcock said:
“The number of Chinese facilities producing APIs for the U.S. market has increased over the past decade, as part of a massive movement of pharmaceutical production offshore”.
This move will certainly help America reduce its dependency on China, especially with the heated trade war between the two economic giants.
The illustrations were provided by Depositphotos.com