Sun Pharma signs US drug pricing deal, secures tariff relief for 2 years
Sun Pharmaceutical Industries has agreed to extend Most Favoured Nation (MFN) pricing to US state Medicaid programmes and to future innovative medicine launches, in exchange for a delay in impending American tariffs. The agreement was announced on September 1, following a White House signing ceremony attended by several pharmaceutical manufacturers, according to the company.
Under the arrangement, Sun Pharma will apply MFN pricing to state Medicaid programmes and has committed to doing the same for any innovative medicines it launches in the future. In return, the US government has agreed to delay the application of Section 232 tariffs on the company's innovative pharmaceutical products for more than two years. Sun Pharma said further terms of the arrangement remain confidential.
"The agreement recognises Sun Pharma's investment in the US market by delaying Section232 tariffs on innovative pharmaceutical products for over two years," a note from the company said, as quoted by The Hindu Business Line.
Rick Ascroft, North America CEO of Sun Pharma, represented the company at the White House ceremony. "Our mission is to reach people and touch lives by providing quality medicines across a patient's entire treatment journey, from consumer health products to generics to innovative medicines," he said. "The United States is a key area of investment and expansion for Sun Pharma across clinical development, sales and marketing, and both API and finished products manufacturing. We are proud to play our part in delivering the medicines that millions of American patients count on every day."
Details of the agreement
The White House announced nine new agreements with pharmaceutical manufacturers "to lower prescription drug prices for Americans in line with the lowest prices paid by other developed nations (known as the most-favored-nation, or MFN, price)", according to a White House communication cited by The Hindu Business Line. The agreements bring the total number of pharmaceutical manufacturers with MFN deals to 26, covering 89% of the branded drug market.
The nine midsized companies besides Sun Pharma were Alcon, Astellas Pharma, BeOne Medicines, BridgeBio, CSL, Kyowa Kirin, Teva Pharmaceuticals, and UCB. The agreements reduce prices on drugs that treat numerous costly, chronic, and even rare diseases, including hemophilia, Parkinson's disease, macular degeneration, glaucoma, liver disease, skin conditions, and various forms of cancer, the White House note said. The same note added that Sun Pharma will contribute 71.4 tons of clindamycin and 6.75 tons of doxycycline, both antibiotics to treat bacterial infections, to the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR), a US programme to stockpile Active Pharmaceutical Ingredients.
US President Donald Trump has threatened a 100 percent tariff on imported branded pharmaceutical products and active pharmaceutical ingredients (APIs), arguing that Americans pay far more for medicines than patients in other developed countries. The agreement comes as the Trump administration seeks to bring down prescription drug costs while simultaneously encouraging pharmaceutical investment in America. While previous attempts to impose MFN pricing through regulation faced legal and political hurdles, the White House now appears to be pursuing voluntary agreements with manufacturers, as reported by Moneycontrol.
The agreement builds on earlier deals with 17 major drugmakers, including Pfizer, Eli Lilly, and Amgen. As of August 31, the US administration had agreements with Pfizer, AstraZeneca, EMD Serono, Eli Lilly, Novo Nordisk, Amgen, Bristol Myers Squibb, Boehringer Ingelheim, Genentech, Gilead Sciences, GSK, Merck, Novartis, Sanofi, Johnson & Johnson, Regeneron, and others, according to The Hindu Business Line.
Market reaction
Sun Pharma shares fell more than 2 percent in early trade on September 1, paring three-session gains after the drugmaker agreed to lower US drug prices in return for tariff concessions. The stock fell 2.3 percent to Rs 1,940, making it one of the top losers on the Nifty 50, according to Moneycontrol. The decline came after a 3.4 percent gain in the previous session and snapped a three-day winning run during which the stock had risen about 4.5 percent. The broader market was also trading lower, with the Sensex down 83.64 points and the Nifty 50 down 44.15 points at 9:17 am.
The pricing commitments could potentially weigh on realisations from medicines covered by the agreement, although the financial impact cannot yet be quantified as Sun Pharma did not disclose details such as the products covered, applicable pricing benchmarks or the extent of its affected sales, as reported by Moneycontrol.
Despite the decline, Sun Pharma shares have gained about 15 percent so far in 2026, while the Nifty 50 is down nearly 8 percent over the same period.
Sun Pharma's US presence
For Sun Pharma, the US is too important to ignore. The company said the US generates roughly 27 percent of its global revenue and is its largest market for innovative medicines, as reported by The Financial Express and Moneycontrol.
Sun Pharma built its presence in the American market initially through generics before expanding into innovative and speciality drugs. The company now ranks second by prescriptions in US dermatology, according to a release cited by The Financial Express, and has been widening its reach in immunology, cutaneous oncology and ophthalmology.
The pricing commitment comes months after Sun Pharma entered into a definitive agreement to acquire Organon & Co. at an enterprise value of $11.75 billion. The company described the deal as a reflection of its continued investment in American patients, healthcare providers and communities.
Sun Pharma is one of India's largest pharmaceutical companies by revenue and a leading generic drugmaker in the US and other emerging markets. Its Global Innovative Medicines portfolio contributes about 22 percent of overall company sales, and the company operates manufacturing facilities across five continents, selling its products in more than 100 countries.