Dr. Reddy's Laboratories has announced that the supply of its generic semaglutide will be significantly delayed, now expected to resume in late October or early November. This interruption stems from an out-of-specification impurity detected during the validation of a scaled-up synthetic API manufacturing process. While the API itself met specifications, the impurity degraded during a subsequent formulation test of the finished drug product. CEO Erez Israeli stated that the company is investigating the root cause and will make process adjustments before repeating validation, a process that includes producing three validation batches and extensive testing.
The delay means Dr. Reddy's will miss expected sales from July through October. The company, which had initially targeted selling 12 million injectable pens in the first year after the drug's patent expiration in March, now expects to supply 6 million to 7 million semaglutide pens between the third and fourth quarters of fiscal 2027. This revised target is still above some analysts' sales forecasts, although the company's market value dropped by approximately $678 million following the announcement. Dr. Reddy's shares closed down 5.9% at 1,269.50 rupees, marking their steepest one-day decline in over three years.
Despite the setback, Dr. Reddy's has assured that there is no impact on patient safety, and no recall concern for products already supplied to the market. Products sent to Canada, where the generic semaglutide launched in May, were made at a different scale and are unaffected, though future Canadian supplies will experience disruption. The company also confirmed no impact on existing global regulatory filings. Dr. Reddy's has informed partners and customers about the supply disruption, and while there are no direct penalties, some arrangements involving down payments may need renegotiation. The company is, however, exploring qualifying another supplier, though this backup option is about a year away.
The delay comes at a critical time in India's competitive semaglutide market. Currently, Dr. Reddy's sold about 39,000 units in India through June, compared to Sun Pharma's 63,000 injectable units. Analysts like Vishal Manchanda from Systematix Institutional Equities warn that if the issue isn't resolved soon, Dr. Reddy's could lose market share to competitors. The disruption has also led to Torrent Pharmaceuticals recalling selected batches of its Semalix injection pens for technical evaluation, as Torrent and USV source finished semaglutide doses from Dr. Reddy's in India.
