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That Kodak Deal

Many people have been wondering what’s going on with the announcement by the Trump administration that Kodak has been contracted to produce pharmaceutical APIs here in the US. Let’s line up some of the public statements about all this first, and then take a closer look. Here’s the press release from Kodak after signing a “Letter of Interest” for a $765 million dollar loan for the deal. They state that:

Once fully operational, Kodak Pharmaceuticals will have the capacity at Eastman Business Park to produce up to 25 percent of active pharmaceutical ingredients used in non-biologic, non-antibacterial, generic pharmaceuticals. . .

The government’s side of this is to be found here, at the US International Development Finance Corporation. Now, you may not have heard of the DFC before, but we’ll get to that in just a bit. Their release says that:

The project would mark the first use of new authority delegated by President Trump’s recent executive order that enables DFC and the U.S. Department of Defense (DOD) to collaborate in support of the domestic response to COVID-19 under the Defense Production Act (DPA). . .Today, Kodak is expanding its traditional product line to support the national response to COVID-19 by bolstering domestic production and supply chains of key strategic resources. . .DFC’s loan will accelerate Kodak’s time to market by supporting startup costs needed to repurpose and expand the company’s existing facilities in Rochester, New York and St. Paul, Minnesota, including by incorporating continuous manufacturing and advanced technology capabilities.

Kodak’s current CEO Jim Continenza was joined at the ceremony by DFC head Adam Boelner, White House Trade Director Peter Navarro, Rear Admiral John Polowczyk (of the White House Supply Chain Task Force) and Deputy Sec. of Defence Peter Norquiest. Said Continenza:

“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”

Kodak’s Chemical History

OK, that lays the foundation, I’d say. What happens when you dig beneath the speeches and the press releases? Kodak’s history with film (and for a time digital) photography is well known. But as for chemicals, George Eastman himself got into the business in the 1920s so he could source his own materials. My maternal grandfather, as it happens, moved to the re-built town of Kingsport, Tennessee to be one of his employees. The company started to sell to outside customers, and Tennessee Eastman became a major producer in the fine chemicals business (making, for example, an awful lot of RDX explosive during World War II on government contracts). The Eastman chemicals business, though, was spun off in 1994 because it was seen as a low-margin business compared to film, but is now (by revenue) about ten times bigger than Kodak. When people think of Kodak and fine chemicals, more likely than not they’re mixing them up with Eastman in their mental registers.

And there was a pharma component at one time. Kodak bought Sterling-Winthrop pharmaceuticals in 1988 for $5.1 billion, in a deal that can only be regarded as disastrous. Six years later, they sold the prescription drug business to Sanofi for $1.675 billion and the OTC business to SmithKline Beecham for $2.925 billion. You will immediately notice that half a billion dollars evaporated along the way, and that’s not counting the losses Kodak sustained during the intervening six years. No, it is safe to say that Kodak does not have a glorious pharmaceutical history. Ex-Sterling people were scattered all over the drug industry after this debacle, and the ones I’ve known generally seemed to believe that you could not have hired a gang of saboteurs to do a more thorough job of destruction than what Kodak accomplished.

But that Kodak is not the one we see before us today. they’re not an R&D company any more, for the most part. The company’s stock lost over 99% of its value from 1997 to when they went through a bankruptcy in 2012, and they emerged a smaller firm in every way. This 2011 article comparing the fortunes of Kodak and Eastman in the years after the split mentions that Kodak’s research spending that year was all the way down to $321 million – well, it was down to $42 million in 2019.  President Trump’s remarks that he had reached “a historic agreement with a great American company” just serve to show how out of touch he is – Kodak is a long way from being even in the Fortune 1000. I mean, this is the outfit that announced in 2018 that they were now a big cryptocurrency player, complete with a Kodak-logoed “Kashminer” Bitcoin-mining device, a harebrained scheme that the SEC put the brakes on rather quickly.

Currently, it’s hard to tell how much of Kodak’s business comes from fine chemical manufacturing itself, although it isn’t much. Their most recent 10-K form breaks it down only as far as “Film and Chemicals” (see Note 15 at that link). That segment comes in at about 13% of revenues, but it also includes industrial film for making printed circuit boards and the good ol’ professional and consumer film businesses. Apparently one customer of the latter accounts for 20% of the revenues of this whole category, so that revenue isn’t coming from chemical sales. And after listing those, the report says that this category “Includes related component businesses: Polyester Film; Solvent Recovery; and Specialty Chemicals“, so chemical production per se is basically the last thing on the list, for what that’s worth. The terms “pharmaceutical”, “drug” and “API” appear nowhere in the filing, nor in their 10-Q for the first quarter of this year. I conclude that the company has basically no business in making pharmaceutical APIs at present. They don’t appear to have any revenues from cryptocurrency either, in case you were wondering.

They do, though, have speciality chemical manufacturing in Rochester, and well-known chem-blogosphere guy Chemjobber has mentioned their presence at trade shows and his knowledge of their business. The people who jumped on the idea of Kodak as a pharma manufacturer because “they’re a camera company” are wrong –  as mentioned, it’s not a huge part of their business, but they do have capacity and they are actively engaged in fine chemical manufacturing. There are other reasons – plenty of them – to wonder about this deal, but the basic Kodak-making-chemicals part is not the place to start. Making pharmaceutical ingredients is another sort of business, of course, with a very different regulatory environment, but Kodak can indeed make chemicals. That said, the mention of a manufacturing facility in St.Paul is interesting, since no such operation is listed in the company’s most recent annual report (see Item 2, Properties). The Kodak Polychrome Graphics business has a footprint in Minnesota, but I can’t find anything about chemical manufacturing there. Or not yet?

How Many APIs? And How Much?

So let’s ask a broad question: how many APIs come from foreign suppliers, and in what volume? It’s actually a very difficult question to answer, because there are a lot of suppliers out there, many of whom are (at least at times) middlemen for yet other manufacturers. We saw this in action during the sartan contamination story, when it turned out that material from a single supplier could show in various places. The companies involved know who they’re buying from, but that could (and does) change as market conditions change, and they don’t have to tell you about it, either.  Pharmaceutical supply chains can be rather convoluted, with one ingredient in a given pill being made partly over here and finished off over there, combined with other ingredients from totally different sources, with the whole thing being mixed up and turned into tablets in yet another location. Here’s a good C&E News article on the foreign and domestic API situation, and it features Janet Woodcock basically throwing her hands up in the air:

“We cannot determine with any precision the volume of API that China is actually producing, or the volume of APIs manufactured in China that is entering the U.S. market, either directly or indirectly by incorporation into finished dosages manufactured in China or other parts of the world”

That’s about the size of it. Problem is, when you talk about “25% of the ingredients”, do you mean by number of total APIs? By volume? By revenue, even? It’s just not clear, and that makes a fuzzier situation even fuzzier. I was hoping to get some back-of-the-envelope estimates going, but it’s not possible at present.

But let me highlight another factor:  a finished API is going to be made from something else, of course. Where do you get that something else, and how far back in the synthesis will you be going? Anyone who knows industrial chemistry will tell you that you’re going to bang into issues of Chinese and Indian supply, especially the former. Let’s take hydroxychloroquine, which Kodak has mentioned specifically, as an illustrative example. I continue to believe that it’s basically useless for coronavirus patients, but it is definitely a needed generic drug (I know someone who just started taking it for lupus, for example). How do you get hydroxychloroquine?

Well, you get it from 4,7-dichloroquinoline; the last synthetic step is an amine displacement. Where do you get 4,7-dichloroquinoline? It’s in a lot of catalogs, but remember, almost all of those are people who are selling you material that they bought from somewhere else, which as far as I can tell, is somewhere that is not in the United States. There are a lot of places to source chemicals – here’s one web site that will give you the idea. If you click “Manufacturer” and “ton” to narrow things down, you will still see 3 4.7-dichloroquinoline sources listed as “United States”: Crescent Chemical, Ivy Fine Chemicals, and Kingchem. But from what I can see, Crescent (out on Long Island) is a distributor for other producers – I can’t see any sign that they have domestic production facilities that will make you tons of dichloroquinoline. The only listing they have for it on their website is in 25-gram bottles from Millipore-Sigma. Ivy (in Cherry Hill, NJ) does list dichloroquinoline, but they also look like they are going to contract that order out to “one of their well-established partners all around the world, as they say. And while Kingchem has their own facility for that sort of thing, it’s in Liaoning. So you can technically produce hydroxychloroquine right here in the good ol’ USA, but unless you reach further back you’re going to be producing it from starting materials that you buy overseas and very likely from China.

There are indeed manufacturers of APIs here in the US, don’t get me wrong. In fact, here is the the Bulk Pharmaceuticals Task Force, an industry group of API manufacturers that looks into supply chain issues like this. Kodak is not a member, presumably because they don’t really have any API business, as mentioned. So why, if you are talking about giving out huge loans to encourage such manufacturing, would you not turn to companies that are already doing it?

The Kodak Loans

That takes us back to the subject of the Kodak deal itself. There are a number of people who have been digging into this, for example, this article at the stock-analysis site Epsilon Theory (h/t “Diogenes” on Twitter, nom de guerre of a well-known short seller). This is when such bears come in handy – they have an incentive to look at the bad news, and I’ve always thought that is a useful bit of seasoning to have in the broader world of stock promotion.

One thing that the Epsilon Theory folks draw attention to is the source of this loan money. The DFC is supposed to be in the business of loaning money out for projects in lower- and middle-income countries, not doling out the cash here in the US. But on May 14, the president signed an executive order mandating that the DFC look into domestic supply chain issues relating to the coronavirus epidemic, so here we are. As with the recent stimulus money from the Treasury, the worry here is that this has the potential to be used as a piggy bank to reward friendly businesses and donors – and before any fans of the current administration jump on that, let me note that this is always the case, with any government agency under any administration, when it starts to hand out money to private ventures. The books should be open, because the political and financial temptations are present every time.

How about this time? Well, it’s for sure that the management at Kodak did extremely well off of this deal. The press has already noted the large stock and option awards granted just in the last month or so, and you can see those grants for CEO Jim Continenza, VP Randy Vandagriff, General Counsel Roger Byrd, and CFO David Bullwinkle via their recent SEC filings. This financial blogger believes that Kodak was already signaling by these moves that something big was coming, and interviews with the CEO and other seem to fit with that timeline. To say the least, awarding your corporate insiders big whacking stock and option grants in advance of a hugely favorable government contract is a bit. . .off. As that post notes, the timing of these grants was quite different from Kodak’s usual awards, almost as if they were rushing to meet some sort of deadline. The grants were option-heavy (not the company’s past practice) and had very aggressive strike prices, well above Kodak’s normal trading in the $2 range.

Now, as for that trading, many noticed that the day before this announcement that Kodak suddenly jumped up on much higher volume. This doesn’t appear to be illegal trading, though, or at least it doesn’t have to be explained that way. Local station WROC had a story Monday about an imminent deal, which was pulled, but not before many people saw it. No, I think that stock activity that’s worth watching in Kodak is (sadly) entirely legal, and it has to do with all those grants from a friendly board of directors. All we know about the political side is Kodak’s CEO sayingWe got connected to the White House and we said we’re trying to bring pharmaceuticals back“.

We also know that Kodak’s largest shareholder (by far) is Southeastern Management, who must be quite relieved that their position is no longer with a company that has a fresh “going concern” warning, but instead has had a gigantic stock leap thanks to a lucrative government transaction. Edit: originally I had some material here about Southeastern and a connection to a company associated with someone (Ted Suhl) whose sentence for bribery President Trump recently commuted. But although these two companies have almost identical names, one is an Inc. and the other is an LLC, and there is no relation. I have seen the same mistake made elsewhere on the web – the more famous Southeastern Asset Management (a large investment firm from Memphis) is indeed a big Kodak shareholder, for sure, but has no connection to Ted Suhl, friend of Mike Huckabee and beneficiary of Donald Trump.

Let’s keep an eye on this deal, then. Chemically, financially, and politically. I don’t think, frankly, that it’s some weird or special case – a lot of stuff like this happens, all the time. But it’s one that impinges on the pharma industry, and it’s a subject that many of us know about. So we’ll see. . .


96 comments on “That Kodak Deal”

  1. Saadya Hashmi says:

    This deal has corruption written all over it.
    How else do you explain why a third-rate API producer – corrected – a NON-API producer can be awarded such money?
    To add salt to the wound…the taxpayer’s money is helping to boost some rich peoples’ compensation even further.

    1. Edwayne Sangalang says:

      That’s easy. Kodak will start acquiring businesses to fulfill the orders and new pharma endeavors moving forward. Brilliant!

      1. Ken says:

        And what are they going to use to acquire new businesses? The loan money’s already being distributed as executive compensation, and I wouldn’t be surprised if a dividend is planned.

  2. Simon Auclair the Great and Terrible says:

    You expect anything but open corruption from this administration?

    1. Tirani says:

      Not at all. I wish I could say I was surprised, but Trumplethinskin has been telling us who he is for the last four years. Unlike some, I’ve been listening carefully, and so I’m voting like my life depends on it this year. (It does.)

  3. Keith Dawson says:

    I live in St. Paul, MN and I can’t find any trace of a Kodak facility here, either. Can’t help but wonder whether the Associated Press, on whose story ( ) almost all the coverage I saw was based, got confused by Kodak’s Hawkeye plant, which is on St. Paul Street in Rochester NY. That plant went dark in 2011 and was bought by a Queens, NY-based investment group in 2018 ( ).

  4. Philip says:

    As a computer programmer I was wondering what the heck is a pharmaceutical Application Programming Interface (API)?

    OK, so I am on the wrong blog for computer programmers. In case anybody else was wondering what a pharmaceutical API is, it is an Active Pharmaceutical Ingredient. That sounds easy enough.

    1. Some idiot says:

      I’m a process chemist in the pharmaceutical industry. I also do some coding (MATLAB), making specialist tools to help with our work. The first time I saw API in a programming perspective, I just thought “what the heck does an Active Pharmaceutical Ingredient have to do with programming??? And it doesn’t even make sense in the context!!!”

  5. John Wayne says:

    Looks like the massive stock jump is people being surprised that Kodak was, ya know, doing anything. Now that stock price is going way down as people look up how profitable selling generic APIs is.

  6. march21 says:

    Maybe Kodak’s trying to copy FujiFilm.

    1. Derek Lowe says:

      Back in the day, I remember when Fuji started eating into Kodak’s market share in the 1980s and 1990s. I shot a lot of slide film in the early 1990s (nature photography) and used mostly Fuji Velvia over Kodachrome. I liked the color palette better; it was a more forgiving film, and it was a lot easier to get people to process E-6 rolls than to pay for someone to do the (unique and weird) Kodachrome chemistry. At one point there ended up being one lab in the world that could still process Kodachrome, and the “all aboard” whistle was sounded for good.

      1. Joe Q. says:


        I totally agree with you on the Velvia vs. Kodachrome front. But Kodachrome itself has a fascinating history, and was way, way ahead of its time. Its inventors were primarily musicians by profession — one of them (Godowsky) had played principal violin in the LA Phil and was brother-in-law to the Gershwin brothers.

        Apparently National Geographic magazine once ran its own K-14 line to handle the insane volume of Kodachrome its photographers went through.

        1. Derek Lowe says:

          Oh, when Kodachrome came out it was a major accomplishment, for sure. Time overtook it, though (before time overtook transparency film in general!)

          1. Marko says:

            “…when Kodachrome came out it was a major accomplishment, for sure. Time overtook it.”

            Nonsense. Time will never overtake it. It was , is , and will always be a great song.

          2. Nick K says:

            Apologies for the off-topic post, but do you have any comments or criticisms of this study on HCQ?


          3. Sau Chi Yong says:

            Haha, I too was a photographer by trade, and remember the days with Kodachrome… I am also looking into HCQ and found if every citizen take HCQ for COVID-19 prevention, the economy and our way of life before would return in no time , I have been taking chloroquine since February…

  7. Simon Auclair the Great and Terrible says:

    Give them a uuuuuge no bid contract to supply HCQ, Clorox, and demon gametes.

  8. drsnowboard says:

    MKGA – Make Kodak Great Again….
    Here in the UK we’ve had Boris’ govt splash cash on a variety of producers of anything but PPE for …PPE. And then there was the contract for a ferry service awarded to a company that had no ferries and no port authority.
    I think to paraphrase plenty , if it smells bad, it is actually worse than you can imagine.

    1. Lambchops says:

      The ferry contract debacle was the responsibility of Chris Grayling so I think we can chalk that one down to garden variety ineptitude. Well, maybe not quite garden variety, it takes a special sort of idiocy to sign a ferry contract with a company that not only had no ferries, but had copied it’s terms and conditions from a takeaway pizza company.

      Now the fact that the very same man was the government’s preferred choice to chair the Intelligence and Security Committee . . . that was dodgy!

  9. c says:

    Where are Trump supporters in calling out this obvious corruption? Wasn’t his appeal supposed to be that he would streamline government and make this type of corruption difficult?

    This country is starting to make me feel sick.

    1. Hap says:

      That ship sailed a long time ago – now whatever Trump and his friends do must be the right thing, because they’re doing it. If the actions aren’t consistent with “making America great again”…well, then the reporting must be another instance of media bias and you can ignore it. It makes things much simpler to “understand”.

  10. Thomas McEntee says:

    The current ‘Directory of Chemical Producers’ database from IHS Markit (once produced by the generally well-regarded and now former SRI Consulting group) has one listing for Eastman Kodak in, yes, Rochester NY, that manufactures exciting products like silver nitrate, fluorescein, and polyester film. Back in the 1970s, my company, Arapahoe Chemicals (part of Syntex), had a fairly thriving custom manufacturing business. Our marketing people gave up calling on Kodak because their Purchasing people said “we don’t need outside manufacturing”…. That was then. At one point, maybe in the late 1980s, Kodak employed more than 125,000 people. The company spun off Eastman Chemicals in…1994. I can’t imagine many of the process/plant chemists and engineers were kept on the payroll waiting for 2020…

    There are other more-capable and credible places to place money for generic API production than EK. Boggles the mind…

    1. Derek Freyberg says:

      As another ex-Syntex employee (from Palo Alto and not Boulder), I know that even as Syntex was making all its own APIs in the 1980s and 1990s it was still purchasing raw materials from around the world.
      How far back down the chain do you want to go? – the API itself, one step back, 2 steps back? This is going to affect how easily your API is affected by offshore events; but who’s going to make, say, propionic acid that xxxx steps down the line will become naproxen.

    2. Nick K says:

      It was a shock to me to find out the Kodak name even exists today. I thought the whole business had folded years ago. I can’t remember the last time I saw someone ordering a product from them.

      We still have some ancient Kodak products in our stockroom.

  11. David Young MD says:

    Is anyone willing to state or list where you think API production should be done at in the US?

    1. Mammalian scale-up person says:

      Sure. You know we made an awful lot in Puerto Rico until fairly recently, right? Especially antibiotics. Merck still makes ivermectin in the US. We used to do plenty in New Jersey, back in the 1990s. There was once quite a bit in Michigan – you can thank Pfizer for destroying it, but I think Kalamazoo is still hanging in there. I believe there’s an SAFC site in Wisconsin too. There are still API plants in Germany owned by Roche and Bayer, and they aren’t dumping their spent catalyst into the groundwater either – they manage to operate safely (though undoubtedly more expensively than, say, Ranbaxy).

      The hard part is solvent – easiest thing to transport large quantities of solvent is rail. The big trucks aren’t generally allowed to travel through major cities with highly hazardous materials. So you have to pick a site where trucks can reasonably get to you from a major intermodal transportation site and / or the shipping dock to you, without hitting a major city in between (i.e. mostly not via I-95 on the East Coast). Plus, you need to be able to do large scale solvent redistillation on site, which means you mostly need to be a bit aways from a major city anyway – out in one of the suburbs. Not *too far* away, in fact I think there used to be an old Polaroid site with a nice solvent still barely 15 minutes out of Boston which is now the site of a grocery store and a strip mall. But you generally don’t want to site a solvent still in a residential area. And you need to be able to guarantee a certain level of security, depending on what you’re making: anyone making fentanyl in the US is going to have a lot of fun accounting for every milligram of material.

      Most of the labor is replaced by automation, especially for HPAPI where it’s just not safe to have a human in the manufacturing area – we have a lot of nice mid-IR and Raman probes to do the things that humans would normally do for those processes. You do need QC, engineering and MSAT on site to some extent, and it’s best to pick a location where you’ll have chemistry and engineering universities feeding you fresh graduates, but the big state schools are fine (University of Delaware has a particularly good ChemEng program that used to support DuPont very nicely). I personally am not convinced that the savings you get from making half-baked crap cheaply overseas, that might be contaminated with heaven knows what, is worth what you’d get by more fully investing in automation. Other industries that work with nasty chemicals, such as microprocessor manufacturing and food processing, have figured out how to do that in Europe and the US by using a lot of automation controls, and they still do fine for profits – Intel in Ireland and AMD’s GlobalFoundries sites throughout the US & in Singapore have been making chipsets with the nastiest chemicals Derek won’t handle, and they do so with high quality and without compromising worker health or emissions, we should take a lesson from them.

      1. confused says:

        Yeah some of the chemicals used in the semiconductor industry are really frightening.

        1. eyesoars says:

          Used to work downstairs from a GaAs fab; phosgene, arsine, HF, WF6 were all there, just for starters. Never saw ClF3, but it might have been there, too.
          Amusingly, we had to do our circuit boards at a remote facility because they required sulfuric acid and some other garden-variety nasty chemicals. Something about the local water table.

      2. Marko says:

        “You know we made an awful lot in Puerto Rico until fairly recently, right? ”

        Yep. We created the P.R. pharm industry , then we destroyed it ( along with the P.R. economy ) , all in the name of ending “corporate welfare , as we know it”. Looks like corporate welfare is back in vogue now , though , so maybe P.R. will get a second chance :

        Puerto Rico Can Help The U.S. End Its Dependence On Chinese Pharmaceutical Ingredients

        1. J N says:

          What was the cause of the QC issues that afaik plagued pharma manufacturing in Puerto Rico?

      3. loupgarous says:

        Very on-point comments. It so happens that the US Gulf Coast has a number of chemical plants with rail spurs, natural gas pipelines, ethylene pipelines and convenient Interstate highway ramps to plants that make a number of odd petrochemicals. Some of these, like chlorine trifluoride, are on Derek’s TIWWW list, yet have a number of lucrative uses in oil refineries. Others are solvents made here because the required chemicals and labor are inexpensive here.

        It remains to be seen how long Trump’s friends can make money on manufacturing low-cost pharma API, but considering how many other political cronies (such as GE’s Jeffrey Imhelt, Obama’s “jobs czar:”) got away with outsourcing our nation’s manufacturing jobs and manufacturing IP to China, there’s a case to be made for US-based plants to make API here where we have more control over manufacturing quality. If this is a scam, it won’t last very long.

      4. Anon says:

        Best possible locations based on your criteria: coastal NC, GA, AL, TX and LA. Close to ports, rail-heads, and possibility to locate these far from population centers. Downside: Hurricanes…but still manageable.

    2. Dan says:

      You won’t wind any comments worth dirt here. just politics and stone throwing. It appears that the previous administrations selling out to the Asian markets for pocket cash has really paid off to …. you know….

      1. chemist says:

        The commenters on this blog are some of the most politically illiterate, mindless Trump-bashers around. The internet chemistry community is full of cringy retards who believe what they see on CNN and MSDNC without a second thought. It’s surprising that a discipline that relies so heavily on critical thinking is filled with mush-brains. Probably because most of them spent so much time in academia they have no clue how anything works in the real world.

  12. dave says:

    Make a note – missing an important detail – the Loan originated out of the DFC ( U.S. International Development Finance Corporation ) who’s CEO is Adam Boehler – Jared Kushners college roommate…

    1. Joe says:

      Most importantly check the huge call volume on the days prior to Trump’s announcement. I do not expect anything to come from SEC investigation. I remember some years ago, Richard Kogan then CEO of Schering Plough disclosed poor upcoming Quarterly results to Putnam Investments prior to the release. Putnam dumped the stock and SEC investigation resulted in a slap on the wrist fine to Kogan! Rich get richer and poor get poorer!

  13. Paul Brookes says:

    As recently as the ’00s, Kodak had a fairly large patent portfolio in the biomedical space (“compositions and formulations for the treatment of xxxxxx” etc.) Once they transitioned to being an IP mill post-2013, much of that property was divested.

    Interesting fact (from here in Rochester NY) – Kodak used to be one of the largest employers of blind and visually impaired people in the world. Turns out if you’re working in complete darkness making film, vision is dispensable! A huge tragedy upon the company’s implosion was the number of blind folks left unemployed, for whom there were not many alternative options.

    1. loupgarous says:

      “Interesting fact (from here in Rochester NY) – Kodak used to be one of the largest employers of blind and visually impaired people in the world. Turns out if you’re working in complete darkness making film, vision is dispensable!

      As the villain in Thomas Harris’s Red Dragon knew well.

  14. Dr. Seymour Tushi says:

    In these trying times we need to come together as a nation and protect our most vulnerable: executives at dying film companies.

  15. David says:

    Kodak aside, there is a real problem with outsourced API. FDA struggles to conduct sufficient on-site inspections in Asia, and when they do, they frequently find horrific GMP violations*. Sadly though, bringing API manufacturing back to the US may not solve the problem, especially if it’s done using “experts” selected by Trump, Kushner, and their cronies.

    *my favorite, from a long list, can be found on Google. Search for “fda 483 centurion dancing trash bags” and select the link to the FDA warning letter.

  16. Dr. Manhattan says:

    “Kodak bought Sterling-Winthrop pharmaceuticals in 1988 for $5.1 billion, in a deal that can only be regarded as disastrous.“. Disastrous is correct.

    Two quick Kodak stories. Kodak apparently was thinking of expanding into pharma for a while. Before going to industry in mid 1986, I was an assistant professor at a university in NYC founded by an oil tycoon. Anyhow, one day in early ‘86, some Kodak guys show up and start asking us if their “unique chemical library” might be used for drug discovery. We were puzzled as to the composition of the collection and didn’t know what to say. Being a wise ass, I ventured it might contain a treatment for photophobia.

    Years later (1996), I visited GSK in the Collegeville, Pa facility, originally built by Kodak for their quick foray into pharmaceuticals. I was told that when GSK moved in, the labs still had abandoned experiments on the bench tops. Apparently it was very abruptly closed down in a single morning. My GSK host said it was like walking onto a Twilight Zone episode.

  17. Anusymous Rex says:

    Maybe this is the start of American Pharma doing strategic work in the US? Sure it’s easy to sell out and use cheap labor, but now we are beholden to cheap market forces and look where we are today. In crisis mode while drugs in our strategic interests can’t be made. Sorry Pharma. You made your bed and now you can’t even get to it. Where does Pharma do their chemistry manufacturing work? Novartis? Vertex? Where do the VCs go? I know where. Rochester is just as good a place as any and they were used to it at one time so bring it home – for the children- it’s too late for us old sell outs.

    1. Thomas McEntee says:

      BASF produces ibuprofen by a slick process at its Bishop, TX plant. Ibuprofen probably is consumed at levels that make it worthwhile to develop/engineer a new process, and build/operate a plant. There undoubtedly are others but the majority of generic APIs probably don’t come close to ibuprofen in volume. VPs of Purchasing don’t get bonuses for “buying American”, they get their bonus if they’ve reduced the standard cost of incoming APIs.

    2. CanChem says:

      Re. where do co’s make drugs: I work in CMC at a mid-sized pharma focused on small molecules. Bunch of different options out there, including in the US; AMRI, AMPAC, Cambrex, Sigma-Aldrich (or whatever they’re calling themselves now) and plenty more. Ex-US, if you want to stay out of India / China you have loads of options in Europe; SK Ireland, Olan, FIS, Esteve, etc… And then more in Japan and South Korea. And more options in Mexico, southeast Asia, and beyond. But if you’re looking at pre-GMP raws everything ends up coming from India or China these days.

  18. CMCguy says:

    Having some direct knowledge of the Kodak take over and eventual dismantling of Sterling I have always viewed with sadness and consternation as a prime example of smart people with limited true understanding of Pharma R&D assuming their technical commitment, general chemical and past business acumen would translate and in fact enhance operations. Viewed externally it actually did not take long to recognize Kodak’s misguidance to negatively alter the core people (via layoffs and voluntary departures) and dynamic environment that was once a leading site of discovery innovation and development being a model of of med-sized but fully functional organization. Of course subsequent (and prior) Big Pharma creation in take overs or mergers did not learn the lesson, even with having more supposed knowledge of Drug R&D, doing more damage than benefit to people, projects and culture.
    15-20 years ago I know the majority of Pharma companies and a few specifically CMOs would likely have underutilized manufacturing capacity to readily handle the production in US of the generics targeted now and more although that capability has declined in recent times thus may not exist. It would be interesting to know if the Kodak deal was presenting to any more traditional Drug Companies? However with current higher standard overhead and resources required in US/EU vs. Chindia generate unattractive ROI desired by shareholders and execs even if facilities and personnel were adequate.

  19. drsnowboard says:

    whatever generic they make, Jared and Ivanka have to take a tablet first…
    Call it the Hyde Law

  20. genericrefugee says:

    If what the Administration wants is to have sites that would run the final (cGMP) steps while still bringing the key early intermediates from Asia (and I don’t think that even most job-hungry states would allow for the meaningful rebuilding of the heavy-duty halogenation, nitration etc. plants that had been closed down decades ago after being focus points for the environmental crusades for years – so this business is not coming back no matter what), the most logical way to do it will be to ask 2-3 Indian major generic API producers to build factories here and promise to pay for the product on a cost+ basis. These guys spent years developing and validating efficient processes, so with domestic US QC/QA organization (and its cGMP knowledge and commitment), and without extreme cost pressure under which most Indian-owned pharma shops operate here, we’ll have reliably good quality product at a price that is higher than Asia-made but not outrageous.
    Whether the whole endeavor makes sense without upstream integration is an open question as the goal of true strategic independence from China is not being achieved.

    1. loupgarous says:

      Indian investors in Lake Charles, LA have just started up the kind of plant you’re talking about, with their executives in charge. The local petrochemical workers are delighted to have the work, and in Louisiana heavy nitration and chlorination have never gone out of vogue. You can drive up and down the Mississippi River valley for over two hundred miles from just south of New Orleans and all around the Interstate loop surrounding Lake Charles and never lose site of heavy petrochemical manufacturing. The same is all around Houston, Texas.

      If you own a copy of John D. Clark’s classic Ignition, the odds are excellent that any plant Clark mentioned for producing rocket fuels and their intermediates (including chlorine trifluoride) in and around Louisiana and Texas is still running. When it comes to plants to make many API molecules (or whichi could easily be restarted for that purpose), it’s not a matter of “if you build it, they will come” – most of those plants still exist .

      BASF’s unit for making phosgene at Geismar (just south of Baton Rouge, LA may be idle at the moment, but it’s a “warm idle”. BASF will happily teach your employees on how to make and handle phosgene safely, as long as the check clears the bank and Homeland Security clears your employees (no more classes in how to crash airliners, thank you very much).

  21. Rohit Chauhan says:

    The last paragraph is for trump. Rest is for us.

  22. Some idiot says:

    A more general point that has been on my mind for a while, and one which this post (and some comments above) refer to:
    There has been a large ans successful campaign (in the EU at least; I don’t know about the US) for a push towards full labeling of foods. And by “full labeling” I mean that the country (and typically company) of origin of the foodstuff is on the label. In my opinion, this is a huge win for consumers, since they have information to act upon. Reasons for acting can include desire for pesticide-free goods, or preference for certain food items from particular countries, or even in order to boycott a country (or company, for that matter) if they feel that this is appropriate.

    In that context I find it somewhat astonishing that (as referred to by Derek above) that it is essentially impossible to find out where a medicine comes from. Yes, the question is complex, as it includes API manufacturing, tablet (or other drug product) manufacturing, packaging, and then of course the legal entity actually selling the stuff. Not to mention the question of source of starting materials or intermediates, at which point the picture really begins to resemble spaghetti…

    My point is, why should we as consumers not be in a position to make choices? I can see no real scientific or logistical reason why it would not be possible to print on the packet the site where API production was performed, ditto formulation and ditto packaging. A requirement by law would make the whole process so much more transparent. The data burden for the selling company would not be increased, since that data already exists.

    I can imagine that the sellers would be against the idea (both originators (mine included) and generics), but that is not the point. I think that we as consumers have the right to be able to see the supply chain for a product we purchase. There are at least two reasons for this. One is the moral side of things: we should have the right to use our wallets to protest against unacceptable working conditions, as has happened over the last decades in the clothing industry. The other is that in some cases (very few, I accept, but none the less important) it actually makes a difference how the API is produced, or how the formulation is prepared. So in that case it makes sense to be able to “follow the API production.” At the moment, if one supplier has a stock-out (happens a bit too often sometimes) then the person has to start a new set of screening other suppliers to find one that works (I have personal experience with this; not fun…!)

    Please note that I am not having a go at generic producers as such here. I know very many generic producers that I have a huge respect for. There are also some (relatively few) that I avoid. My main point and argument here is to make the whole process more transparent for consumers. I can see no scientific or other reasonable reason why this should not be the case…!

    1. Nobody in particular says:

      Your comment is a good one in principal; however, the reality is that when you go to the pharmacy, you have no say in what pills get dispensed. Let alone if your PBM forces you to get your scrip filled by mail. Information on the packaging is all well and good, but I am stuck with what CVS wants to provide me (i.e whatever makes them the most profit), and I suspect many if not most americans are in the same boat.

      1. Pedwards says:

        In addition, if there’s only one or two companies out there making a key intermediate or API and both of them are in China, then it doesn’t matter if the consumer wants to avoid taking drugs that were at least in part manufactured in China. If they need that drug, they have no choice. It’s not like they can find a local small manufacturer to make it for them the way people can with food (at least, not in a way that is legal and not sketchy).

  23. expharm says:

    I would have thought that they would seek out companies like Merck who had shuttered facilities and lease them or form a consortium to produce API….then again, failure begets failure

    1. loupgarous says:

      The problem with Merck and (say) GE and its subsidiaries such as RCA is that once outsourcing is sold to the public, you can’t make a case for hiring the people at the plants who work there at a decent wage, when people are lining up in China to do the same jobs. You can’t convince people to pay full-ticket for the same products (unless you line some investors up to accept less return on their venture capital.).

  24. Mamadou says:

    You guys are just talking talking and talking. Can someone tell me if Kodak stock is worth is to buy or not.
    I have bought some shares . They jumped to the roof that day and they are in the red .
    If anyone wants to give his or her opinion, please use simple language because I don’t know much on stock market.

    1. EP says:

      I would not recommend buying individual stocks if you don’t know what you are doing. Expected earnings drive stock prices, period. The market now expects Kodak’s earnings to greatly improve over the next few years, as they ramp up production. In an interview I watched with the CEO, the main factors cited were Kodak’s Eastman Facility in NY and their history of working with chemicals. You can bet Kodak was willing to cut any deal they could to get this work. Kodak’s future probably depends on this venture working. Whether or not Kodak has the expertise today is not that important. They understand business, manufacturing, processing, etc. Kodak will be hiring many new employees to get to where they need to be. The biggest risk I see, other than speculation taking the stock price beyond what is justified by future earnings, is a Biden Administration. If elected, Biden could come in and kill the deal, causing Kodak’s stock price to drop back down to $2.

    2. Derek Lowe says:

      I certainly hope this is a joke comment. If it’s not, and you really don’t know much about the market but just jumped into this in the way you say, then here’s the simple language:

      You are in great danger of losing all your money. If not on this trade, then on the next one. The market destroys people who make decisions the way you made this one. This is not investing, it’s gambling, and the odds are against you.

      1. EJ says:

        I would bet money on the “joke” category.

        This is a biomedical blog, not Yahoo Answers or And if this particular post really hit the SEO jackpot, this would not be the only such comment.

  25. steve says:

    If you don’t think Trump and his cronies won’t get kickbacks from this deal then you haven’t been paying attention the last 4 years. EVERYTHING Trump does is for the benefit of one person and one person only. Take a guess who that is.

    1. Tom says:



    2. EP says:

      What Trump has done over the last 4 years has benefited me greatly! I must be the one.

      1. Derek Lowe says:

        Trump has lowered my taxes, and the stock market has increased under his tenure. I have more money than I had when he came into office, and I want him thrown out of office, dragged down 17th Street, and chucked into the Tidal Basin. So there’s that.

        1. EP says:

          If I remember correctly, our other choice was to put the Clintons back in the White House. I can’t envision any scenario where that would have been better for me, you, or anyone else. Always better to use logic over emotion.

          1. Derek Lowe says:

            I’ve been voting against Bill Clinton since 1980, when I lived in Arkansas. He’s an awful person, and I can’t say that I like his wife much better. But Trump is demonstrably even worse. We’ll agree to disagree on this one, and I’d rather not turn this comments threat into a Trump/Clinton rematch.

        2. chemist says:

          Sad to see you have Trump Derangement Syndrome, for which there is no cure. You are a terminal case, Derek. Luckily newer generations of scientists like myself aren’t so politically illiterate. Can’t wait to see you melt down when Trump wins in November.

  26. A Nonny Mouse says:

    I received a call from an old (in both ways) Indian contact recently who is one of the big guys (OK, THE big guy) in the Indian generic pharmaceuticals industry. Post the conflict between China and India, the government has asked him to start looking at going back to making more basic starting materials so that there is less reliance on China for these. If the Indians are so reliant on the Chinese, then there is certainly little hope for the likes of Kodak to compete.

    We recently tried to get a UK and a Spanish company to quote us on making the first tons of a product (new process). Their labour was coming in at $400 and $500 per kg, respectively. We are now shipping the Indian made starting material back to India where we have a price of $40-50/kg. There really is no way that they could compete, especially when the finished product is selling at $350/kg.

    1. EP says:

      The future is AI, robotics, automation, etc. Labor costs will be less important. As Bill Gates likes to point out, we will all have more time to relax and vacation in the future, assuming we invested in AI, robotics, automation, etc.

      1. Charles H. says:

        While I agree that “the future is AI”, that doesn’t say when that future will arrive. And you can be sure it won’t arrive everywhere at the same time.

        This makes deciding what to do with a long term investment, like building a factory, difficult. Which means the perceived payoff needs to be higher, or it won’t happen.

      2. confused says:

        Which I’m not sure is really a good thing for society overall.

        I mean, it’s good for people in tech fields, but a significant proportion of people /like/ working with their hands. And given the rate of increase in education costs, it’s probably not a good thing for college to be practically required to get a decent job, either.

        1. kismet says:

          I feel like your comment is falling in the classic trap that is most ludditism (“I cannot imagine a different world so a different world must be bad”). If people like working with their hands, they can. My flatmate does gardening and some simple farming. Doesn’t change the fact that society is better off with more efficient agriculture than 100 years ago now that barely anyone still works as a farmer.

          1. confused says:

            No, it’s not about not imagining a different world, it’s about seeing a trend *which is already happening to some degree* and is IMO not particularly helpful, and thinking more of it will not be good.

            Obviously having 80% of the population as farmers wasn’t optimal either. But I think there is a “happy medium”.

            Sure people can have hobbies working with their hands, but I’m talking about how people make a living. I don’t think closing off more and more low-education-requirement jobs because of automation is a good thing for society.

  27. ezra s abrams says:

    Derek probably mentions this, but it maybe lost: Kodak was, at one point a world power in organic synthesis

    and they still claim to be pretty big in contract manufacturing

    however, I honestly don’t know how Kodak compares to other US manufactureres in this space; I know a lot of them have moved to India/China recently

    lotta talk about the Sterling thing.
    well, in diagnostics, Kodak had an equally illfated venture; iirc, they were going to make POC immuno and NA assays with a dry film in a 35 mm size format

    bad timing
    if you look at the MAX film standard, it was, actually, truly a marvel of science; they developed a whole new plastic to serve as the filmstock as it was more dimensionally stable
    like someone made the very finest hi tech slide rule ever made in history in . . .1985

  28. Eli Barnett says:

    If there’s one thing the Trump administration has made clear, it’s that the American populace generally does not care much about corruption. At all. Even if we manage to get rid of Trump, the consequences from this are going to be felt for a long time.

    Thanks for the thorough reporting, Derek.

  29. Ted says:

    Interesting. We had a whole building at Upjohn’s Portage plant in Michigan that made fine chemicals for Kodak. When I got there (mid-90s) it was considered a pretty staid, mid-margin, set-in-stone operation.

    Cut to the mid 2010s and Intellectual Ventures took a lead in acquiring and divvying up their 0.5 billion digital patent estate, with funds utilized to pull Kodak out of bankruptcy.

    I was pretty surprised to see Kodak’s name associated with anything other than an oldies station playlist…


  30. An Old Chemist says:

    The Wall Street Journal reported that the Kodak deal includes a focus on hydroxychloroquine, a controversial medicine that Trump and his allies have touted as a COVID-19 treatment. Controlled trials have shown the medicine is not effective against the novel coronavirus, and experts have advised against its use.

    1. DrOcto says:

      Bulls get rich, bears get rich, pigs get slaughtered.

      1. Joe says:

        Bears get slaughtered under the current Fed regime! Zero interest rates, continual pumping of stock market by Trump administration. Shorts have got slaughtered!! Eventually, and who knows when, stock market will most likely crash!

    2. SamIAm says:

      That seems suspect to me. I work for a pharma contract manufacturer. Back in April, one of our sister sites that does API manufacture started gearing up to make hydroxychloroquine. To my knowledge, they held the only current FDA filing for hydroxychloroquine manufacture in the US. By the end of May the project had vanished off the radar.

      Why would you give a large grant to a company that would have to scale up manufacture from scratch when there’s another company with a proven track record of production readily available?

      Makes me think the point is the transfer of money, not the poduction of actual product.

      1. Joe says:

        Yes. Transfer of money is the important point here! Trump and his cronies make millions whilst 150K Americans have died!

    3. EJ says:

      You must be new here.

  31. Driving, Bye says:

    Two perspectives:
    Immediately, some level of crony deals, possibly also an uninformed choice based on a famous brand name.

    Longer term: The practice of in-shoring pharma manufacturing is established, and after some waste and shenanigans a variety of domestic producers create facilities, skills and supply chains in the USA (and maybe Canada) which would not otherwise exist. This of course is not guaranteed, but it looks fully possible.

    Comparison: Solyndra.

    To me it’s a worthwhile trade. It not The Way Things Should Be, but it’s the best option that is available.

    1. loupgarous says:

      I agree, not because the optics of this deal are good. They’re not.

      But if we have an in-country API manufacturer against whom FDA has more recourse than current API manufacturers, it’s a net win. Oatmeal’s better than no meal in this instance.

      1. loupgarous says:

        I retract my previous statement on the Kodak deal. Kodak should either explain in detail WHICH APIs it intends to make under this deal and what the net advantage to Americans it offers, or withdraw from the deal.

    1. PhlowSkeptic says:

      I would love to see Derek do a post on Phlow. The only problem…there’s almost no information on them! I have been heavily involved in developing continuous processes for manufacturing API at big pharma as well at CMOs and this deal seems super shady to me. There are a number of CMOs that have heavily invested in building flow capacity, but BARDA is giving a grant to a totally unknown (and before this year, nonexistent) company? Frank Gupton has experience with flow chemistry, but still nothing compared to what I’ve seen from several established CMOs. AMPAC has experience with Phlow chemistry, but they do not have experience at the Virginia site. I’ve tried to find more information on terms of the deal, but haven’t had any luck.

  32. Anonymous says:

    1. Randall Tobias of Eli Lilly outdid Kodak’s loss of $0.5 B on the S-W acquisition and sell off. In 1993, Merck acquired Medco, a PBM, and set a trend for other pharma to emulate. PCS, another PBM, was already up for sale valued at around $200 M by the WSJ and others. Lilly managed to bid things up to $4.4 B and I’m sure PCS owners laughed all the way to the bank. One year later, Lilly took a $2 B write-down. One year after that, Lilly managed to sell off PCS for $1 B. A net loss of $3 B on $4.4 B (68%) in less than 3 years. That beats Kodak’s measly loss of 0.5 / 5.1 = 10% over 6 years. Tobias was hailed as a genius and later went to work in the Bush administration from which he had to resign after a scandal.

    2. For a long time, Kodak was the only company with an alleged catalog of fine chemicals. Alfred Bader, founder of Aldrich, told stories of how difficult and unpredictable it was to get compounds for research from Kodak. He would call and ask about a chemical and replies were often dismissive. ‘Maybe we’ll make some, maybe not. Call back next year.’ That was one of his motivations to start a company providing research chemicals reliably.

    3. Long ago, I was told that one reason for the growth of the pharma industry in PR was tax policy in the 1950s-1960s. To encourage investment in weaker, smaller economies, there was a huge tax break if one or more steps were done off shore. Sometimes, that meant send batches of APIs to PR, repackage them, and send them back to the US. The cost of that do-nothing step was less than the value of the tax break so it was a win. Of course, some of the off shored steps were “real” steps and not just pushing pills around.

    4. I had some more comments … maybe later.

  33. 1111111 says:

    How about…..ah… No. Let’s not line up any arguments having to do with the trump administration or anything to do with it. Anyone in academics or pharma is going to be “against” the trump administration. It’s a forgone conclusion. End of story.

  34. mallam says:

    And the saga may quickly come to its ignominious end:

    “Eastman Kodak’s $765 million U.S. loan agreement on hold after recent allegations”

    1. Marko says:

      Alternative headline : “Overexposure ruins sunny picture for Kodak”.

      1. Some idiot says:

        Wonderful! 🙂

  35. A Neighbor says says:

    You should see the new “house” (giant mansion) that James Continenza just built on Big Marine Lake in Scandia. Also just bought a 12th story penthouse for 2000000 in Destin Fla on the beach. I guess the Kodak business is booming, thanks to his buddy Trump!!! Those stock options sure worked out for him. Maybe jail should be his new “house” after the sec investigation is over.

  36. loupgarous says:

    Saw article on CBS News this morning on Phlow and its plans to bring the API and more highly finished drug supply chain back to the US

    Edwards’ explanation of the Kaleo opioid fracas seemed as straightforward as we could expect given the time he had to make it. If only the Kodak deal’s optics were that appetizing…

  37. Chem_will_never_return says:

    Sorry, it’s all a moot point, you’ll never bring chemical manufacturing back unless you disband the EPA and get people to run shifts in a fume hood and sleep in a company dorm

  38. joan masters says:

    Lets take a look at the realization that many Americans are in need of Pharma! The cost and regulation of these drugs is out of control. I feel like bringing manufacturing of these drugs back to the US is urgent. We have so much talent in this country and we can not lose site of that. What my take away is from this article is that what we are putting into our bodies is a modge podge of ingredients sourced from all over the world from a variety of companies and compiled into a pill or capsule possible somewhere else. I am a bit older and at the young end of baby boomer. I remember getting a letter years ago that I was eligiable for a recall of drywall in our home which was from china. Contaminated with some chemical. I remember Lumber Liquidators had a class action law suit due to lumber from China being contaminated with Framaldihide. sorry spelling . I remember hearing a report on NPR that hip replacement persons had a recall on their hip replacement due to the fact that the plastic was continually downgraded from surgical level to basically what they use for a park bench. We have got to do whatever it takes to get off of Chinese dependence. we must work together as a nation to support our current leaders to acheive our independence once again.

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