Dr Reddy's Laboratories Ltd. has pushed back the commercial supply timeline for its semaglutide product to November after identifying a quality issue during production scale-up, while also lowering its fiscal 2027 supply expectations by nearly half.
Speaking during the company's conference call, the management said commercial supplies are now expected to begin from November onwards. The company now expects to supply 6-7 million semaglutide pens during fiscal 2027, down sharply from its earlier expectation of around 12 million pens.
The company said the delay stems from the detection of an impurity during active pharmaceutical ingredient (API) testing. According to the management, the impurity emerged while scaling up API production and was identified in pre-validation batches.
Dr Reddy's said the validation process will be completed before commercial supplies commence.
The company clarified that there is no impact on any existing marketed products and no recall risk, as the affected batches were produced before the validation process. However, it acknowledged that it may have to write down inventory related to the impacted batches.
ALSO READ: Dr Reddy's Shares Slide Over 6% After Semaglutide Batch Quality Concern
Despite the delay, Dr Reddy's maintained its broader financial outlook for fiscal 2027. The company reiterated that it expects to deliver an Ebitda margin of around 20% and said the semaglutide issue does not alter its overall business guidance.
Management said existing inventory in the Canadian market remains unaffected. The impact will be limited to the inability to supply additional quantities during the delayed launch period, with no disruption to products already available in the market.
Dr Reddy's said it remains committed to its existing sourcing relationship while simultaneously expanding its in-house manufacturing capabilities for semaglutide and other products. The company said this strategy is aimed at strengthening long-term supply capabilities and supporting future growth in the segment.
Shares of Dr Reddy's Laboratories fell over 6% on Thursday with the stock trading at Rs 1,261 apiece. It ended up being the dragger for the Nifty index as it ended 5.89% lower. Out of 41 analysts tracking the company, 19 maintain a 'buy' rating, 10 maintain a "hold", and 12 maintain a "sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 1350.16 implies an upside of 2%.
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