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Sun Pharma shares slipped over 2% intraday after the company joined a group of eight drugmakers at the White House to announce new agreements with the Trump administration aimed at making medicines more affordable in the US.
The deets: the Trump administration has been pushing drugmakers to lower prices in the US. It has already struck similar deals with 17 major pharma companies, including Pfizer, AstraZeneca, Merck, Eli Lilly and Novo Nordisk.
As part of its deal, Sun Pharma will get a two-year break from Section 232 tariffs on its innovative medicines, helped by the investments it has already made in the US.
In return, Sun Pharma will offer certain medicines to state Medicaid programmes under the government’s most-favoured-nation, or MFN, pricing model. It will also follow this pricing approach for future innovative medicines.
MFN pricing aims to bring US drug prices closer to the lower prices paid for the same medicines in other developed countries.
Why it matters: the temporary tariff relief is particularly important for Sun Pharma because the US is a huge part of its business. The country contributes around 27% of its global revenue and is its biggest market for innovative medicines.
Sun Pharma is already a major player in the US dermatology market and is expanding into areas such as immunology, cancer treatments and eye care.
Earlier this year, the company signed a definitive agreement to acquire Organon & Co. at an enterprise value of $11.75 billion, a deal that would further increase its exposure to the US market.
Together, the drugmakers involved in the latest agreements have also committed to investing at least $19.6 billion in US manufacturing in the near term.
Big picture: global spending on medicines is expected to reach around $2.4 trillion by 2029, growing at an estimated 5-8% annually.
