Dr Reddy’s aims to resume semaglutide supply by November after API fix

Mumbai: Dr Reddy’s Laboratories expects to resume supplies of its generic semaglutide by November after resolving quality issues over the active pharmaceutical ingredient (API) that forced it to halt shipments, chief executive Erez Israeli said.

The company on Wednesday maintained its overall FY27 growth and profitability guidance despite the setback over the widely used medication for managing Type 2 diabetes and obesity.

Israeli said the drugmaker has identified the root cause of the impurity issue and is on track to complete corrective measures by September.


“We believe that we understand the chemistry and the root cause. We need to test it in batches…,” Israeli said in a post-earnings media interaction. “We are planning to resolve all the API issues by the third week of September, supply the API to our partner, OneSource…which means that if everything goes well, we should be in the market between the last week of October and the beginning of November,” he said.

Earlier this month, the Hyderabad-based drugmaker halted commercial supplies of its generic semaglutide injection after unspecified impurities associated with the API were identified during a scale-up process. Israeli said then that the impacted batches of the drug were never shipped and that the product available in the market was safe for use.

After market hours Wednesday, the company reported a 69% year-on-year decline in consolidated net profit to Rs 443 crore for the first quarter ended June, hurt by lower sales of cancer drug lenalidomide and a one-time provision linked to the semaglutide API. Revenue declined 6% year-on-year to Rs 8,071 crore, while rising 7% sequentially. Ebitda dropped 56% to Rs 1,009 crore and margin fell to 12.5% from 26.7%.

The company said it recognised a provision of Rs 239.7 crore towards inventory and other associated costs related to the semaglutide API, reducing gross profit, Ebitda and profit-before-tax margins by around 3%.

Israeli ruled out any further financial hit from the issue.

“All the associated costs…we put a one-time provision in this quarter. We do not anticipate something like that in the future,” he said.

Despite the disruptions, the company expects to supply 6-7 million units of semaglutide this fiscal year.

The priority markets after India and Canada include Brazil, Turkey and Mexico, followed by broader launches across Latin America, Europe and North Africa, the CEO said.

Outlook steady

“We are absolutely maintaining both the growth trajectory, both in sales as well as in profit,” Israeli said. “All of the objectives that we set in the past are still valid, beside this delay.”

He said the company’s base business, excluding the impact of the loss of lenalidomide exclusivity, continues to post healthy double-digit growth across markets. “All of our markets will continue to grow double-digit, and we will have the right profitability,” he said.