Kodak Soars After Government Loan To End China Medical Supply Chain Reliance

Tyler Durden's Photo
by Tyler Durden
Tuesday, Jul 28, 2020 - 09:14 AM

In an apparent retaliation over rising rhetoric over the "China Virus" in April, American firms producing medical goods in China were slapped with new export restrictions, stranding much of the supplies in warehouses across the country.

This move highlighted to many just how precarious the US medical supply chain was, and more critically, how dependent on new 'Enemy #1' China the American healthcare system was.

As we detailed previously, according to research and US Congressional hearings, something like 80% of present medicines consumed in the United States are produced in China. This includes Chinese companies and foreign drug companies that have outsourced their drug manufacture in joint ventures with Chinese partners. According to Rosemary Gibson of the Hastings Center bioethics research institute, who authored a book in 2018 on the theme, the dependency is more than alarming.

Gibson cites medical newsletters giving the estimate that today some 80% of all pharmaceutical active ingredients in the USA are made in China.

It’s not just the ingredients. It’s also the chemical precursors, the chemical building blocks used to make the active ingredients. We are dependent on China for the chemical building blocks to make a whole category of antibiotics… known as cephalosporins. They are used in the United States thousands of times every day for people with very serious infections.”

The made in China drugs today include most antibiotics, birth control pills, blood pressure medicines such as valsartan, blood thinners such as heparin, and various cancer drugs. It includes such common medicines as penicillin, ascorbic acid (Vitamin C), and aspirin. The list also includes medications to treat HIV, Alzheimer’s disease, bipolar disorder, schizophrenia, cancer, depression, epilepsy, among others. A recent Department of Commerce study found that 97 percent of all antibiotics in the United States came from China.

And so, the Trump administration has begun to do something about this over-reliance with today's first of its kind loan "to help expedite domestic production of drugs that can treat a variety of medical conditions and loosen the U.S. reliance on foreign sources."

Somewhat forgotten film-maker Eastman Kodak received a $765 million U.S. government loan under the Defense Production Act to help produce ingredients for drugs.

“We have a long, long history in chemical and advanced materials -- well over 100 years,” Continenza told Dow Jones, adding that they have the infrastructure to begin production quickly.

For the US, the benefit of providing the loan to Kodak is to reduce reliance on other countries, particularly China, for drugs, DFC head Adam Boehler said.

“We don’t ever want to be in a position, because of a pandemic, because of any reason,” that a foreign entity could upend U.S. access to medicines or pharmaceutical products.

And Eastman Kodak shares are a double in the pre-market to its highest since January 2018...

As The WSJ reports, the onetime leader in photography sales is gearing up to produce ingredients for generic drugs, including the antimalarial drug hydroxychloroquine.

He said Kodak will produce “starter materials” and “active pharmaceutical ingredients” used to produce generic medicines, and expects the loan to create around 300 jobs in Rochester, and 30 to 50 jobs in Minnesota.