Why Kodak Desperately Tries to Sell Drugs?

Toni Koraza

The new ‘Kodak Moment.’

https://img.particlenews.com/image.php?url=3z52vU_0YCLC5LK00Photo by Markus Spiske on Unsplash

Kodak’s stock rose over 1000% after the United States government announced to fund the analog photography pioneer with a stimulus loan of $756 million to produce ingredients for generic drugs.

Kodak was supposed to satisfy over 25% of American demand for pharmaceuticals that were usually shipped from China and India.

The government funding was put on hold in August 2020, shortly after the initial announcement.

However, Kodak has no plans of changing the business trajectory. The company desperately needs to change its core business.

Here’s Why Kodak Sells Drugs Now.

If you’re wondering why the photography dinosaur sells drugs now — fully supported by the US government — the answer lies in Kodak being a full-blown business dinosaur.

What many business analysts had missed with Kodak’s fall from grace was that Kodak couldn’t survive in the digital era, not in the camera industry at least.

Everything that made Kodak great was everything that made it an unsustainable relic of a bygone era.

No Scaling Back

Kodak is often criticized for not scaling back on analog production and focusing more on digital cameras — the product Kodak invented in 1975.

Analyst believed Kodak dropped the digital camera to save its Razor-and-Blades model it had with selling analog cameras and film.

The truth was that for Eastman Kodak Company there was no going back from analog technology, and a transition to the digital world it pioneered was almost impossible.

When young Seth Godin told George Fisher —  Kodak’s CEO at the time —  to scale back the analog business and focus on the digital, George Fisher took Seth Godin to his office, gazed out of the window, and asked how many processes are needed to produce camera film.

The answer was 38, and that was exactly the number of facilities under Fisher’s window. Kodak couldn’t slowly scale back. You couldn’t close just one facility, because you needed all 38 workings at full capacity to produce the analog film. Kodak had to shut down the entire division while it was still making billions for the company.

The reason Kodak failed, it turns out, has nothing to do with grand corporate strategy (the people at the top saw it coming), and nothing to do with technology (the scientists and engineers got the early patents in digital cameras).
Seth Godin.

Instead, Kodak invested in making better films. The scientists and engineers invented the digital camera, but the dinosaur-analog division was so huge that Kodak couldn’t risk closing down every facility. The people at the top saw the change coming, and couldn’t do much to escape the harrowing business fate.

Ultimately, what destroyed Kodak was what made it the talk of the town and a hot stock pick for the recession in 2020.

Kodak History Bulletin

  • 1889: George Eastman found Eastman Kodak Company and introduced the first Kodak camera, an instant hit on the markets.
  • 1935: Invention of Kodachrome, the first successful color materials.
  • 1963: Instamatic cameras and cartridge loading films democratized photography. Everyone could take photos now.
  • 1975: Steve Sasson invented the digital camera.
  • 1976: Kodak dominated analog film production, holding 90% of the market.
  • 1989: Apparent decrease in demand for analog cameras, run by digital cameras.
  • 1991: Kodak’s first commercial digital camera.
  • 2000: Canon, Sony, and Nikon dominate the digital market in the same way Kodak did during the 20th century.
  • 2012: Eastman Kodak filed for bankruptcy.
  • 2020: Kodak’s 765 million government deal to produce KSM to satisfy 25% of the American Market for generic drugs
  • 2020: The deal is put on hold, but Kodak has no plans of changing the new direction.

Kodak's Technology.

You had to buy film, chemicals, and paper from Kodak to shoot and develop your photographs. The company’s original business model was based on Guillette’s Razor and Blades strategy.

The original camera was not the main driver for profits. The profits were in analog films. Each time a customer wanted to use the camera she had to re-buy the film.

Kodak has built an immense manufacturing footprint over a century of producing analog technology.

  • 16 million ft² of manufacturing ground
  • 1200 acres of manufacturing units
  • 88 manufacturing buildings
  • Wastewater facility

Immense knowledge in the field is what comes with a century of innovating and manufacturing. The first photographic materials were made mixing chemicals and adjusting chemical processes. Kodak has built extensive knowledge in the production and management of various chemical materials.

DFC has reached out to Kodak’s CEO and proposed a unique deal. With the latest American government policies to bring back jobs and become less dependent on India and China, Kodak was the obvious choice for business resurrection.

America has outsourced the production of most key generic pharmaceutical ingredients. With the latest global health crisis, the new Kodak Moment makes perfect sense.

The same chemicals used in the production of key generic pharmaceuticals are the ones that Kodak’s business tradition already knows how to make. Repurposing facilities to produce generic drugs might be a win-win scenario for both the private company and the American government.

We are yet to see how this change affects the real price of medication, but having more control over the production chain can’t be bad. The Fox news anchors are already calling Trump a business revolutionary, CNBC is stunned by this deal and even CNN seems to be on board.

Investors are driving up the stock price, launching it into the financial stratosphere. In addition to winning a one-of-a-kind loan, Kodak’s stock has risen from $2.14 on last Friday, to $22 this Friday, which makes for a roughly thousand percent increase in price on a weekly chart. Kodak’s market cap is close to one billion dollars, before even receiving the stimulus loan.

The long and expensive chemical process that has ruined Kodak originally is making the company of vital national interest right now.

The Takeaway.

The American economy is famous for resurrecting dinosaurs. Kodak stands at the winning end of a new policy to bring back jobs and decrease dependence on China and India

The latest global health concerns have forced national economies to start questioning indigenous manufacturing sectors. America is dependent on developing nations to a greater extent than it feels comfortable with.

Kodak plans to satisfy 1/4 of the generic USD KSM market, using repurposed technology for making the analog film.

The move may prove to be one of the biggest business plot twists in history.

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