The supply disruption is expected to last until late October or early November, prompting analysts to cut earnings forecasts and warn the drugmaker could lose ground in India's semaglutide market.
Dr Reddy's Laboratories' semaglutide supply disruption has deepened concerns about its ability to sustain an early lead in India's diabetes market, after the company said commercial supplies were delayed because certain batches were out of specification due to an issue related to the active pharmaceutical ingredient, or API. The company has said there is no impact on patient safety or on existing global regulatory filings, and now expects supplies to resume in late October or early November. The stock fell 6% on Thursday and was down as much as 3.7% on Friday before trading 2.2% lower at 1,241.90 rupees, making it the top loser on the pharma index, which was down 0.2%. Brokerages said a prolonged disruption could weaken Dr Reddy's first-mover advantage in semaglutide, hurt pricing power and slow earnings growth. Emkay Global cut its fiscal 2027 earnings estimates by about 7%, while Systematix downgraded the stock to "hold" from "buy", reduced its fiscal 2028 semaglutide revenue estimate to $100 million from $150 million and lowered its target price to 1,398 rupees from 1,475 rupees. The company wiped $678 million off its market value on Thursday after halting commercial supplies of semaglutide injections following the detection of an unspecified impurity during the scale-up of API production.