Sun Pharma Strengthens US Footprint with Drug Pricing Deal, Tariff Relief

Sun Pharma will offer MFN pricing to US state Medicaid programmes, allowing buyers to access the lowest available price for a medicine.

Sun Pharmaceutical Industries has agreed to provide Most Favoured Nation pricing to state Medicaid programmes in the US, in a deal that also gives the Indian drugmaker a more than two-year delay on Section 232 tariffs affecting its innovative medicines.

The agreement comes as the US government has been seeking lower prescription drug prices while also encouraging pharmaceutical companies to strengthen manufacturing and supply chains within the country.

For Sun Pharma, the arrangement links pricing commitments with continued access to the US market and greater certainty around its growing innovative medicines business.

Under the agreement, Sun Pharma will offer MFN pricing to US state Medicaid programmes.

The model allows buyers to access the lowest available price for a medicine. The company has also agreed to extend the pricing arrangement to future innovative medicine launches in the US.

In return, the US government has delayed the imposition of Section 232 tariffs on Sun Pharma’s innovative products by more than two years. The company has not disclosed further commercial details of the agreement.

Rick Ascroft, CEO of Sun Pharma North America, said the US remains a key investment and expansion market for the company across clinical development, sales and marketing, as well as Active Pharmaceutical Ingredient (API) and finished-product manufacturing.

The agreement is significant as Sun Pharma’s US strategy has increasingly moved beyond its traditional generic medicines business. The US is its largest market for innovative medicines and contributes about 27% of the company’s global revenue.

Sun Pharma has also been expanding its presence across areas including dermatology, immunology, cutaneous oncology, and ophthalmology.

Earlier this year, Sun Pharma also entered into a definitive agreement to acquire Organon at an enterprise value of $11.75 Bn, significantly increasing its exposure to branded medicines, biosimilars and the broader US healthcare market.

For Sun Pharma, MFN pricing could create pressure on margins, particularly if medicines supplied through Medicaid have to be offered at substantially lower prices.

However, the arrangement could also provide access to a larger patient population while reducing tariff-related uncertainty.

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