Kodak Shifts Into Drug Production

Kodak, the same innovative company and a trailblazer in its time, is now going to focus on pharmaceutical. From photography to drug making, how is Kodak able to make such a huge adjustment?

In response to the pandemic, President Donald Trump invoked the Defence Production Act (DPA). It is through DPA that Kodak, once a leader in photography, is gearing up to majorly shift gear.

Under thUnder the DPA, Kodak is the recipient of $750 million. White House officials say the loan is the first-of-its-kind. According to officials, the company will engage in producing ingredients for generic drugs.

As a result, shares of Eastman Kodak (KODK) nearly tripped on Tuesday, July 28.

What is the Defense Production Act?

Congress initially passed the DPA in September 1950 at the start of the Korean War. Its principles are similar to the War Powers Act of 1941. The act gave the president sweeping authority to control the domestic economy during World War II. While the original DPA has been modified over the years, it is still a potent law that gives the president a lot of power.

Since 1950, Congress reauthorized the law several times. The most recent reauthorization was in the John McCain National Defense Authorization Act in 2019; with an expiration date in 2025.

What does it do?

Basically, it gives the executive branch substantial powers. Mostly through executive order, the president can direct private companies to shift production, or provide services, allocate materials, and facilities, for national defense purposes.

Additionally, to bolster production, the president can offer loans, make purchase commitments, install government equipment in private factories, etc.

How does it affect the economy?

According to White House officials, the move will add 350 jobs for the film developer. According to Kodak officials, the loan is similar to a commercial loan, and it will be within 25 years. More details about this development are set to be released on Tuesday afternoon.

Meanwhile, Kodak is seeing a lot of movement in the pre-market hours, the rise of its stocks continued into the market hours of Tuesday.