Shares of Sun Pharmaceutical Industries Ltd fell more than 2% on 1 September after the drugmaker agreed to extend most-favoured-nation (MFN) pricing to US state Medicaid programmes and future innovative medicine launches. 

The company, however, secured a delay of more than two years in potential US Section 232 tariffs on innovative pharmaceutical products.

Under the agreement with the US government, Sun Pharma will offer its medicines to state Medicaid programmes at MFN prices, which means prices comparable to the lowest prices paid in other developed countries. The arrangement will also apply to future innovative medicines launched by the company in the US.

For Sun Pharma, the tariff relief is important because the US is its largest market and contributes around 27% of its global revenue. The agreement delays Section 232 tariffs on innovative pharmaceutical products for more than two years, giving the company greater visibility over costs and its US business strategy.

The immediate financial impact remains difficult to assess because several commercial details of the agreement have not been disclosed. 

While lower drug prices could put pressure on pricing and margins for some products, avoiding potentially higher import tariffs could provide a counterbalancing benefit. The agreement therefore gives Sun Pharma greater certainty in one of its most important markets.

The development comes as the Trump administration continues its push to bring US drug prices closer to those paid in other developed countries. The latest agreements cover nine pharmaceutical companies, including Sun Pharma, and take the total number of companies with MFN agreements to 26, covering about 89% of the US branded drug market, according to the White House.

The deal is also significant given Sun Pharma’s planned $11.75 billion acquisition of Organon, which would further expand its presence in the US healthcare market.

Overall, the agreement provides tariff certainty but introduces pricing pressure, making the long-term financial impact dependent on how the company balances lower US drug prices with stronger market access and reduced trade-related costs.

At 12:20 pm, the shares of Sun Pharmaceutical Industries were trading 2.45% lower at Rs 1,936.00 on NSE.

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