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Kodak pharmaceutical deal leaves some in the industry scratching their heads

U.S. Food and Drug Administration
The federal government is considering loaning Kodak more than three-quarters of a billion dollars to produce generic pharmaceutical ingredients.

As Kodak remains quiet on many of the details of its plan to launch a pharmaceutical division funded in large part by a federal government loan of more than $700 million, hospital pharmacy chiefs and industry analysts are divided on how sensible the idea is.

The deal isn’t final yet, and the federal Development Finance Corporation said it’s doing due diligence work to determine whether Kodak is a good fit for manufacturing some of the active ingredients in medications.

If the loan is approved and production begins, Kodak and the federal government said, it will insulate the U.S. from global supply chain interruptions, as most active ingredients in pharmaceuticals are manufactured in China and India. The loan would be the largest on record from the agency.

To Curt Haas, pharmacy chief at the University of Rochester Medical Center, making pharmaceutical products is a lot like baking. The big difference between making a loaf of bread at home and making medicine in a lab is the amount of government oversight, he said.

“There’s a recipe. You follow the recipe, you create the final product, then you go through multiple rounds of testing to make sure that what you are setting out to manufacture is what you actually manufactured,” Hass explained.

Haas said his supply of pharmaceutical ingredients was already under threat, along with the rest of the country, even before the COVID-19 pandemic began in Wuhan, China, where many of the factories that make the ingredients are based.

“I have folks here at Strong and at Highland whose whole job it is every day to manage drug shortages,” Haas said. “We scramble every day.”

While pharmacists and industry analysts are in agreement that it’s important to bring drug production onshore, some are still questioning the particulars of this effort.

“The first question that I had about this is, why Kodak?” said Ken Kaitin, director of the Center for the Study of Drug Development at Tufts University near Boston.

He said the decision could make sense: The chemistry of photography is not terribly different from the chemistry of medicine.

“The link between photo companies and pharmaceutical products and other chemicals is not that remote. There’s a clear link between those two,” he said.

On the other hand, Kaitin said, there are many other companies in the U.S. that are already making pharmaceutical products. He said he’d yet to see evidence that Kodak would be better than them.

Kodak, through spokesperson Arielle Patrick, said that it is “uniquely positioned” to contribute to the U.S. pharmaceutical supply chain.

The company has extensive infrastructure and “deep expertise in chemical manufacturing and supply chain management,” Patrick said.

Jim Della Rocco, a retired pharmacist, is skeptical.

“I have to be honest, I am scratching my head,” he said.

Della Rocco retired a few months ago as the pharmacy director at Unity Hospital in Greece. He said he wants Kodak to succeed, but he can’t see how it’s going to be able to cheaply and safely make medical ingredients.

Della Rocco said other companies in the U.S. that are already making pharmaceutical ingredients were almost certainly better positioned with experience, chemists and capability to quickly increase production capacity than Kodak.

“Why did the government choose Kodak?” Della Rocco asked. 

The federal agency that oversees the loan process did not respond to emailed questions about why it’s pursuing Kodak as a pharmaceutical manufacturer.

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