Dr Reddy's Laboratories has paused supplies of its injectable semaglutide after production impurities were detected. While the oral version remains unaffected, the company expects to resume injectable supplies by November. Investors are evaluating the impact on the drug's projected contribution to future earnings.
Dr Reddy's Laboratories has temporarily halted the supply of its injectable semaglutide in India, Canada, and several emerging markets. The decision follows the identification of quality issues involving impurities during the production scale-up of the drug's active ingredient. As of Monday, July 13, 2026, the company's shares were trading at Rs 1,238, reflecting a minor decline of 0.68%.
Impact on Production and Future Sales
The supply disruption stems from challenges encountered during the internal manufacturing process. The company is currently working on necessary adjustments to its production methods. Management expects to complete the required validation of these new processes by the end of September. If these validation batches meet quality standards, commercial supplies are projected to restart by November.
This delay has forced a downward revision in the sales outlook for the injectable version. The expected volume of semaglutide pens for the 2027 fiscal year has been adjusted to 6-7 million, lower than the previously anticipated 10-12 million. Analysts at Nomura have updated their revenue estimates for the drug, factoring in $140 million for FY27, followed by $170 million in FY28 and $200 million in FY29.
Segment Performance and Risks
It is important to note that the quality concerns are isolated to the injectable product line. The oral formulation of semaglutide, which the company has introduced in the Indian market, continues to be available as it utilizes a different sourcing process for its active ingredients. Despite the current hurdle, semaglutide injectables are still expected to contribute roughly 13-14% to the company's earnings over the projected three-year period. However, the company faces a one-time inventory write-off in the current fiscal year due to these quality setbacks.
For investors, the primary risk remains the execution timeline. While the company aims for a November resumption, any further technical issues during the validation phase could lead to additional delays in market supply. The ability of the company to maintain its quality standards during the scaling process will be a key factor in ensuring future revenue from this segment.