As per the exchange filing, Dr. Reddy’s stated that certain batches of Semaglutide were found to be out of specification due to an issue associated with the Active Pharmaceutical Ingredient (API) used in the product.
“We are investigating the root cause and taking appropriate measures to ensure product quality,” the company said in its filing.
Dr. Reddy’s also warned that until the issue is resolved, commercial supplies of the product will be delayed for a certain period of time, while also clarifying that there is no impact on patient safety or on the product’s existing global regulatory filings.
“We remain committed to ensuring reliable global supplies of this important metabolic therapy,” the company said.
In May this year, Dr. Reddy’s had launched the semaglutide in the Canadian market, which is expected to be a $120 million opportunity for the company.
Brokerage firm Jefferies, in a note dated July 1, stated that it is stretching its estimates for two key growth drivers for Dr. Reddy’s, one being semaglutide in Canada, where it has a higher market share despite pricing pressure from competition, and Abatacept in the US, which could launch in 2027 despite outstanding observations on its plant.
Despite increasing its financial year 2027-2028 Earnings Per Share (EPS) estimates by 3% to 9% compared to base estimates and estimated fair value to ₹1,540, the potential upside is only 13% in an optimistic scenario.
Since Jefferies believes that the risk-reward is unfavourable for Dr. Reddy’s, the brokerage maintained its “underperform” rating on the stock.
Shares of Dr. Reddy’s Laboratories fell as much as 6.3% after the announcement to ₹1,264.1. The stock, with today’s fall, has nearly wiped out all of its gains so far this year.
