Sun Pharmaceutical Industries has agreed to extend most favoured nation pricing to US state Medicaid programmes and future innovative medicine launches as part of an agreement with the Trump administration to delay impending tariffs on pharmaceutical products.

The agreement was announced on September 1 during a White House signing ceremony attended by representatives of several pharmaceutical manufacturers. Sun Pharma said the arrangement recognises its investment in the US market and provides a delay of Section 232 tariffs on innovative pharmaceutical products for more than two years.

Most details of the agreement remain confidential, making it difficult to assess the immediate financial impact on Sun Pharma. The company said the arrangement reflects its commitment to supporting access to medicines in the US, with Rick Ascroft, North America CEO of Sun Pharma, representing the company at the White House ceremony.

Most favoured nation pricing involves a pharmaceutical company voluntarily agreeing to sell medicines to US government health programmes at prices comparable to the lowest prices paid in other developed countries. The approach is part of the Trump administration's broader effort to reduce prescription drug costs while encouraging pharmaceutical companies to expand manufacturing and investment in the US.

US President Donald Trump has threatened tariffs of up to 100 percent on imported branded pharmaceutical products and active pharmaceutical ingredients. The proposed measures have raised concerns across the industry over higher costs, supply-chain disruption and the potential impact on pharmaceutical companies with significant exposure to the US market.

For Sun Pharma, the US market is strategically important, accounting for roughly 27 percent of its global revenue and serving as its largest market for innovative medicines. The company has also increasingly shifted from its traditional generic-drug business toward specialty pharmaceuticals, with growing operations across dermatology, immunology, ophthalmology and oncology.

The delay in potential Section 232 tariffs is therefore a significant element of the agreement. Section 232 is a US national security provision that allows the government to impose tariffs on imported products. For Sun Pharma, avoiding such tariffs could help protect margins and supply-chain economics, particularly as the company continues to expand its presence in the US.

The agreement also comes at a significant time for Sun Pharma following its announced definitive agreement to acquire Organon and Co in a transaction valued at $11.75 billion. The acquisition represents one of the company's largest strategic transactions and is aimed at expanding its presence and scale in the global healthcare market, including the US.

By participating in the MFN programme, Sun Pharma can potentially reduce its exposure to punitive US tariffs while supporting the administration's drug affordability objectives. However, the financial trade-off from lower pricing under the MFN arrangement will depend on the specific medicines covered and the eventual implementation terms.

Sun Pharma was among nine pharmaceutical companies, including Astellas Pharma, Teva Pharmaceuticals and UCB, to sign the latest agreements. The additions bring the total number of pharmaceutical companies participating in MFN agreements with the Trump administration to 26.

According to the White House, companies covered by the programme now account for approximately 89 percent of the US branded drug market. The nine companies involved in the latest agreements are also expected to collectively invest at least $19.6 billion in US manufacturing in the near term, while several companies have agreed to provide active pharmaceutical ingredients to the US government's strategic reserve.

The latest agreements build on earlier arrangements involving 17 major pharmaceutical companies, including Pfizer, Eli Lilly and Amgen, as the Trump administration continues to pursue voluntary agreements with drugmakers as an alternative to regulatory attempts to impose MFN pricing.