How Sun Pharma is avoiding a tariff hit by agreeing to MFN pricing for US Medicaid
Sun Pharma’s latest US agreement comes as the drugmaker expands its presence in innovative medicines, with America accounting for 27% of its global revenue and the $11.75 billion Organon acquisition reinforcing its long-term bet on the market.
- Sep 1, 2026,
- Updated Sep 1, 2026 2:30 PM IST
Sun Pharmaceutical Industries has agreed to extend Most Favoured Nation (MFN) pricing to state Medicaid programmes in the US and apply the pricing mechanism to future innovative medicine launches, as the Indian drugmaker deepens its commitment to the American market.
The agreement was announced on September 1 following a White House signing ceremony attended by Sun Pharma and several other pharmaceutical companies.
The deal also gives the company a reprieve from potential Section 232 tariffs on innovative pharmaceutical products for more than two years, according to Sun Pharma. Other terms of the agreement remain confidential.
The White House said the latest agreements with nine pharmaceutical manufacturers will give every state Medicaid programme in the country access to MFN prices on products made by these companies. The latest agreements take the total number of pharmaceutical manufacturers with MFN deals to 26, covering 89% of the US branded drug market.
For Sun Pharma, the development comes at a strategically important time as the company continues to shift its US business beyond generics towards higher-value specialty and innovative medicines.
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The US is its largest market for innovative medicines and accounts for approximately 27% of its global revenue, making it central to the company's long-term growth plans.
“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,” said Rick Ascroft, North America CEO of Sun Pharma, who represented the company at the White House ceremony. He added that the company was “proud to play its part” in providing medicines relied upon by millions of American patients.
The agreement also includes a commitment to strengthen US pharmaceutical supply chains. The White House said Sun Pharma will contribute 71.4 tonnes of clindamycin and 6.75 tonnes of doxycycline to the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR). Both are antibiotics used to treat bacterial infections. The reserve is aimed at reducing reliance on foreign sources and ensuring adequate supplies of key medicines in an emergency.
The nine pharmaceutical manufacturers covered by the latest agreements have also committed to invest at least $19.6 billion collectively in US manufacturing in the near term, according to the White House.
Sun Pharma's US presence was initially built around generics, but the company has progressively expanded into innovative and specialty medicines. It currently ranks second by prescriptions in US dermatology and has businesses spanning dermatology and immunology, cutaneous oncology and ophthalmology, alongside its consumer health and generics operations.
The US agreement comes as Sun Pharma is making one of its largest bets on the American market. Earlier this year, the company entered into a definitive agreement to acquire Organon & Co. at an enterprise value of $11.75 billion. The transaction reflects Sun Pharma's continued investment in the US market and its efforts to expand its presence among American patients, healthcare providers, and communities.
Sun Pharma's global innovative medicines portfolio spans dermatology, ophthalmology and onco-dermatology and accounts for about 22% of the company's sales. Its vertically integrated operations include manufacturing facilities across five continents, with its medicines reaching physicians and consumers in more than 100 countries.
Sun Pharmaceutical Industries has agreed to extend Most Favoured Nation (MFN) pricing to state Medicaid programmes in the US and apply the pricing mechanism to future innovative medicine launches, as the Indian drugmaker deepens its commitment to the American market.
The agreement was announced on September 1 following a White House signing ceremony attended by Sun Pharma and several other pharmaceutical companies.
The deal also gives the company a reprieve from potential Section 232 tariffs on innovative pharmaceutical products for more than two years, according to Sun Pharma. Other terms of the agreement remain confidential.
The White House said the latest agreements with nine pharmaceutical manufacturers will give every state Medicaid programme in the country access to MFN prices on products made by these companies. The latest agreements take the total number of pharmaceutical manufacturers with MFN deals to 26, covering 89% of the US branded drug market.
For Sun Pharma, the development comes at a strategically important time as the company continues to shift its US business beyond generics towards higher-value specialty and innovative medicines.
Don't Miss: How poor representation and pay inequity are hampering women’s rise to the top of corporate India
The US is its largest market for innovative medicines and accounts for approximately 27% of its global revenue, making it central to the company's long-term growth plans.
“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,” said Rick Ascroft, North America CEO of Sun Pharma, who represented the company at the White House ceremony. He added that the company was “proud to play its part” in providing medicines relied upon by millions of American patients.
The agreement also includes a commitment to strengthen US pharmaceutical supply chains. The White House said Sun Pharma will contribute 71.4 tonnes of clindamycin and 6.75 tonnes of doxycycline to the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR). Both are antibiotics used to treat bacterial infections. The reserve is aimed at reducing reliance on foreign sources and ensuring adequate supplies of key medicines in an emergency.
The nine pharmaceutical manufacturers covered by the latest agreements have also committed to invest at least $19.6 billion collectively in US manufacturing in the near term, according to the White House.
Sun Pharma's US presence was initially built around generics, but the company has progressively expanded into innovative and specialty medicines. It currently ranks second by prescriptions in US dermatology and has businesses spanning dermatology and immunology, cutaneous oncology and ophthalmology, alongside its consumer health and generics operations.
The US agreement comes as Sun Pharma is making one of its largest bets on the American market. Earlier this year, the company entered into a definitive agreement to acquire Organon & Co. at an enterprise value of $11.75 billion. The transaction reflects Sun Pharma's continued investment in the US market and its efforts to expand its presence among American patients, healthcare providers, and communities.
Sun Pharma's global innovative medicines portfolio spans dermatology, ophthalmology and onco-dermatology and accounts for about 22% of the company's sales. Its vertically integrated operations include manufacturing facilities across five continents, with its medicines reaching physicians and consumers in more than 100 countries.