Canada notice may delay Dr Reddy's semaglutide generic launch

Health Canada's non-compliance notice may delay DRL's semaglutide generic launch by 8-12 months, say analysts; shares fall over 4 per cent on Thursday

Hyderabad-based Dr Reddy's Labs (DRL) timeline to launch generic injectable semaglutide in Canada is set to be hit after the firm received a non-compliance notice (NoN) from the country’s Pharmaceutical Drugs Directorate, said analysts.

 

The NoN from the Canadian drug regulator seeks additional information and clarifications on specific aspects of its regulatory submission for the new drug.

 

The development has led to a more than 4 per cent drop in DRL’s share prices.

 

“Considering this is a major near-term product opportunity for the company, we expect near-term volatility in the share price,” an analysis by Nuvama stated.

 

According to analysts, this development could delay the launch of its new semaglutide injection by at least eight to 12 months.

 

“Though we were always cautious on this opportunity, a negative review by Health Canada reflects the worst case,” a report by market analyst Citigroup stated.

 

Semaglutide is the active ingredient of popular weight-loss drugs Wegovy and Ozempic, which are manufactured by Denmark-based Novo Nordisk.

 

Several drugmakers were targeting to make a generic version of the popular drug, even as Novo's patent on it is set to expire in several markets, starting next year.

 

Among them, the Canadian market would be the first to see semaglutide lose exclusivity, with patent expiry in January 2026.

 

Analysts added that Canada seems cautious on generic versions of semaglutide. This is because it is a mass product without any approved generic by any developed market regulatory agency, especially the United States Food and Drug Administration (USFDA).

 

“Due to this, we think Health Canada is cautious before it approves the first semaglutide generic. DRL has a first-to-file (FTF) for this product in Canada and this seems to be its third review,” Nuvama said.

 

It added that analysts have observed a couple of complex products getting approved after two review cycles. “Therefore, we are still building the product approval near the patent expiry,” Nuvama added.

 

Similarly, a report from Morgan Stanley adds that success in Canada for generic semaglutide is a key driver for the firm’s FY27 earnings, with timely approval and launch key to staying on that track.

 

However, Bank of America (BofA) stated that while the semaglutide approval may have been pushed out, it still sees the drug being launched in the first half of FY27 (H1FY27) rather than a lost opportunity.

 

“Dr Reddy’s has a filing in 87 countries and indicated confidence to sell all 12 million pens in FY27 even if Canada approval is delayed. This could offset impact from delay,” BofA added.

 

On its part, DRL stated that it will submit a response to the NoN promptly and within the stipulated time frame.

 

“We remain confident in the quality, safety and comparability of our proposed product and remain committed to making this important therapy available to patients in Canada and other markets at the earliest,” the drug major said in its regulatory filing.

 

On Thursday, DRL’s shares dropped by 3.94 per cent, closing the day at ₹1.203.30 on the Bombay Stock Exchange (BSE).