New Delhi: Facing the threat of potential tariffs, India’s largest drug firm, Sun Pharma has offered Most Favoured Nation (MFN) pricing to US Medicaid programme under an agreement with the Trump administration. MFN pricing typically ensures that a buyer procures at the lowest price, compared to other developed nations.The deal provides a playbook for domestic pharma companies looking to expand their sales in the US, the world’s largest market, by building their portfolio of innovative or speciality drugs. The agreement signed on Aug 31 recognises Sun Pharma’s investment in the US market by delaying potential Section 232 tariffs on innovative pharmaceutical products for over two years, a company statement said.Under Section 232, US announced a 100% duty on innovative, patented drug imports, while generic medicines imported into the country would face tariffs of 100% from Aug 2028 and 200% a year later. The agreement with the US govt is aimed at prioritising access to affordable medicines for American patients.US is Sun Pharma’s largest market for innovative medicines and a cornerstone of its long-term growth strategy, generating approximately 27% of its global revenue. Sun Pharma scrip closed over 1% lower at Rs 1,931 on BSE.Analysts said sales of Sun Pharma’s innovative drugs in US are around $1 billion, and are expected to increase to about $3 billion, following acquisition of Organon.“The agreement is a politically astute decision that needed to be made, while it also removes the overhang of tariffs. With the Organon deal, the company’s scale would increase significantly. There would be hardly any impact on earnings due to the reduction in prices’’, Vishal Manchanda, analyst at Systematix Group told TOI.The development comes at an important time as the company continues to shift its US business beyond generics towards higher-value specialty and innovative medicines. Sun Pharma initially built its US presence on generics, followed by an increasing emphasis on innovative and specialty medicines. The company ranks second by prescriptions in US dermatology and continues to expand across dermatology and immunology, cutaneous oncology and ophthalmology.The company joined eight pharma majors, which signed agreements on Aug 31 at the White House to 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, according to a White House statement.Rick Ascroft, North America CEO, Sun Pharma, who represented the company at the White House, said: “The United States is a key area of investment and expansion for Sun Pharma across clinical development, sales and marketing, and both active pharmaceutical ingredients (APIs) and finished products manufacturing’’. Further terms of the agreements remain confidential.The agreement also includes a commitment to strengthen the US supply chain by contributing APIs to the Strategic Active Pharmaceutical Ingredients Reserve (SAPIR) to reduce reliance on foreign nations and ensure the US builds a stockpile. Sun Pharma will contribute 71.4 tons of clindamycin and 6.8 tons of doxycycline; both antibiotics to treat bacterial infections, to the SAPIR. The latest agreements bring the total number of pharma manufacturers with MFN deals to 26, covering 89% of branded drug market in the US.
