Updated: Aug 19, 2020
Kodak’s latest bungling of its exceptional $765 million deal with the federal government to start production of pharmaceuticals – a deal which would generate hundreds of jobs for the Rochester area – comes three decades after the firm’s last venture into the pharmaceutical industry suffered a disastrous ending for the Capital Region.
Back in 1998, Kodak was projected as a “white knight” for taking over Sterling Drug Co., which provided jobs for 1,300 individuals in Rensselaer County at the time, fighting off a harsh takeover of Sterling by the Swiss Pharmaceutical giant F.Hoffmann-La Roche & Co.
Although largely revered for its photo and film ventures, Kodak has manufactured hundreds of thousands of chemical compounds throughout its history that it believed could play a useful role in the pharmaceutical industry. It banked on its acquisition of Sterling to establish a rapid foothold into the drug industry.
Sterling workers and local economic development officials were joyous at first that Kodak won the bidding war with a $5.1 billion offer, believing that Rochester-based Kodak would handle Sterling's local manufacturing and research facilities in East Greenbush and Rensselaer better. But that optimism disappeared quickly when Kodak announced just a year after that it would be packing up and transferring all of its operations to Pennsylvania.
"These are hundreds of people whose families have worked there generation after generation, and I know personally," then East Greenbush Supervisor Michael VanVoris stated at the time. "We're kind of shocked."
In a similar turn of events, officials in Rochester were startled last week when Kodak's widely publicized intention to start its drug business was halted by the Trump administration, pending an investigation to strange stock trading activity. Kodak's shares rose to $40 from $2 late July after Trump disclosed that the government was granting $765 million loans to Kodak to re-establish its Pharma division to assist the U.S. in maintaining a domestic supply of some drug ingredients. The deal was expected to generate 350 jobs, majorly in Rochester, although some would be located in Minnesota.
Kodak stated it is carrying out its own review of stock trading by executives and board members using a freshly inaugurated board committee that will work alongside the law firm Akin Gump Strauss Hauer & Feld.
According to a statement issued August 7 by the Company, “The committee, made up of directors Jason New and William G. Parrett, will oversee an internal review of recent activity by the company and elated parties in connection with the announcement of a potential loan by the U.S. International Development Finance Corporation to support the launch of Kodak Pharmaceuticals.” It is uncertain if the loan would be reinstated by the Trump administration to allow Kodak to proceed with its new pharmaceutical unit if no wrongdoing is established.