Dr. Reddy’s Laboratories plans to restart generic semaglutide supplies by November after resolving API quality issues. While a recent one-time cost provision impacted quarterly profits, the company expects to supply millions of units this fiscal year across several international markets.
Detailed Coverage
Dr. Reddy’s Laboratories has announced that it is set to resume the supply of its generic semaglutide injection by November 2026. This follows a period where the company paused commercial shipments after detecting impurities in the active pharmaceutical ingredient (API) during the manufacturing scale-up process. The company has clarified that this was a quality control measure and that products already in the market remain safe for use.
Resolving Manufacturing Hurdles
Management has identified the root cause of the impurity concerns and is currently implementing corrective actions. These measures are expected to be finalized by the third week of September 2026. Once these fixes are complete, the company plans to provide the API to its partner, OneSource, which will facilitate a return to the market for the drug between the end of October and early November.
Impact on Quarterly Financials
The company’s most recent financial performance reflects the challenges associated with this supply disruption. For the quarter ended June 2026, Dr. Reddy’s reported a 69% year-on-year decline in consolidated net profit, which stood at Rs 443 crore. Total revenue for the same period fell by 6% to Rs 8,071 crore, and EBITDA margins compressed significantly to 12.5% from 26.7% in the previous year.
A primary factor behind these figures was a one-time provision of Rs 239.7 crore taken to cover costs related to the semaglutide API. Additionally, the company faced a reduction in sales for its cancer drug lenalidomide, which had previously benefited from period-specific exclusivity advantages. The company has noted that it does not anticipate further financial impact from the semaglutide issue, as the associated costs have already been accounted for in the recent provision.
Scaling for Future Demand
Despite the recent setbacks, Dr. Reddy’s remains optimistic about its broader growth trajectory for the 2027 fiscal year. The company is targeting a supply of 6 to 7 million units of semaglutide within the current fiscal year. The initial market re-entry will focus on India and Canada, with subsequent plans for expansion into Brazil, Turkey, Mexico, and other regions across Europe and North Africa.
Beyond this specific drug, the management highlighted that the company's core business continues to demonstrate double-digit growth. For investors, the key area to monitor will be the successful execution of the supply chain restart in November and how effectively the company can scale production to meet its volume targets for the remainder of the year.