Dr. Reddy's Semaglutide Approval Delayed in Canada, Analysts Adjust Price Targets

Dr. Reddy's Laboratories is facing a setback as its application for the Semaglutide injection in Canada has been delayed. The Pharmaceutical Drugs Directorate issued a Notice of Non-Compliance, requesting additional details on the submission.

Dr. Reddy's Stance: The company plans to submit a response quickly and remains confident in the Semaglutide injection's quality and safety, aiming for an early launch in Canada and other markets.

Market Potential & Timeline: Dr. Reddy's highlighted the Semaglutide patent expiry in January 2026 and sees a significant opportunity across 87 countries within 12-15 months, with India, Brazil, and Turkey as other key markets. They estimate that 12 million pens could be absorbed by other countries if Canada's approval is delayed.

Analyst Outlook: Analysts expect multiple competitors for Semaglutide and estimate a 5-12 month delay for Dr. Reddy's. The projected revenue opportunity is around $100 million by fiscal year 2027.

Brokerage Reactions: Nomura maintained a "buy" rating but lowered its price target to ₹1,580 and reduced EPS estimates due to anticipated lower Canadian revenue. Morgan Stanley kept an "equalweight" rating with a ₹1,389 price target, seeing Canadian Semaglutide as a crucial earnings driver. Citi reiterated its "sell" rating and ₹990 price target, citing challenges in offsetting the drag from Revlimid generics and a concerning pipeline.

Stock Performance: Shares of Dr. Reddy's Laboratories closed 2.4% lower on Wednesday at ₹1,258.4 and are down 8% year-to-date.

Impact This delay directly affects Dr. Reddy's Laboratories' short-to-medium term revenue growth projections from a key product launch. The stock may face continued pressure until regulatory clarity is achieved. The broader impact on the Indian stock market will be limited, primarily affecting Dr. Reddy's stock and potentially sentiment around other Indian pharmaceutical companies with similar upcoming launches. Rating: 6/10

Difficult Terms Semaglutide injection: A medication used to treat type 2 diabetes and for weight management. It belongs to a class of drugs called GLP-1 receptor agonists. Notice of Non-Compliance (NON): A formal notification issued by a regulatory authority indicating that a submitted application or product does not meet the required standards or is missing necessary information. Pharmaceutical Drugs Directorate: The regulatory body in Canada responsible for approving and overseeing pharmaceutical drugs. Abbreviated New Drugs Submission (ANDS): A pathway for submitting applications for generic drugs to regulatory authorities, demonstrating bioequivalence to a reference drug. Earnings Per Share (EPS): A measure of a company's profitability that divides its net earnings by the outstanding shares of common stock. Revlimid: A brand-name drug used to treat multiple myeloma and other conditions, whose patent expiration allows for generic versions.