Dr Reddy's plunges 6% on semaglutide batch quality, supply delay concerns

Dr Reddy's informed stock exchanges that certain batches of semaglutide were found to be out of specification due to an issue associated with the active pharmaceutical ingredient used in the product.

Dr Reddy’s Laboratories share price movement

 

Share price of Dr Reddy’s Laboratories plunged 6 per cent to ₹1,261.20 on the BSE in Thursday’s intra-day deals after the company informed stock exchanges that certain batches of semaglutide were found to be out of specification due to an issue associated with the active pharmaceutical ingredient (API) used in the product.

 

At 11:29 AM on Thursday, Dr Reddy’s quoted 5 per cent lower at ₹1,279, as compared to 0.86 per cent rise in the BSE Sensex. The stock corrected 11 per cent from its 52-week high of ₹1,414.40 touched on June 29, 2026.

 

 

However, in the past six months, Dr Reddy’s outperformed the market by gaining 6 per cent, as against 8 per cent decline in the BSE Sensex. The BSE Healthcare index however, rallied 14 per cent during the same period.

 

Why is Dr Reddy’s stock under pressure?

 

Dr Reddy’s today i.e. Thursday, July 9, 2026, said in an exchange filing that certain batches of semaglutide were found to be out of specification due to an issue associated with the active pharmaceutical ingredient (API) used in the product. 

 

The company said it is investigating the root cause and taking appropriate measures to ensure product quality. Until the issue is resolved, commercial supplies of the product will be delayed for a certain period of time. There is no impact on patient safety or on the product's existing global regulatory filings, Dr Reddy’s said.

 

The company further said its remains committed to ensuring reliable global supplies of this important metabolic therapy. The management of the company will host a conference call to discuss the topic and answer any questions from the participants on Thursday, July 9, 2026 between 16:30 – 17:00 Indian Standard Time (IST) and 07:00 – 07:30 Eastern Time (ET).

 

Dr Reddy’s outlook

 

Dr Reddy’s said in its financial year 2025-26 (FY26) annual report that it is the first company to secure market authorization for generic semaglutide in India & Canada.

 

The Glucagon-Like Peptide-1 (GLP-1) therapies have emerged as one of the most significant shifts in global healthcare by redefining treatment for diabetes, obesity and related conditions, while opening opportunities for broader access as patent and regulatory pathways evolve. GLP-1 therapies are expected to grow at 20 per cent compound annual growth rate (CAGR) through 2030, accounting for nearly 9 per cent of global prescription drug sales, with five of the top ten best-selling medicines by then. Semaglutide represents the first major near-term GLP-1 opportunity, with expected patent expiries in markets such as Canada, India, Brazil, Turkey and China creating potential for lower-cost competition and expanded access in this key metabolic therapy, the company said.

 

Meanwhile, analysts at Emkay Global Financial Services in the Dr Reddy’s Q4 result update said that they have been of the view that the debate around the magnitude of the Semaglutide opportunity for Dr Reddy’s is only meaningful if the ex-gRevlimid quarterly US base settles at $230-240 million. 

 

While the US base business figure, adjusted for one-offs, was in that range in Q4, analysts believe that June 2026 quarter (Q1FY27) sales alone can help conclude if this is a reasonable quarterly run rate to work with. 

 

“Besides, this quarter’s gross margin performance clearly points to sharp pricing pressures in the core US base business which we have been highlighting in the past, and which are now well acknowledged,” the brokerage firm said.

 

The management’s confident commentary on likley double-digit growth in North America in FY27 (ex-Semaglutide, ex-gRevlimid), 6-7mn Semaglutide pen sales in CY26, and gross margin recovery to >50 per cent in FY27—could prevent meaningful consensus earnings downgrades for now. However, in the absence of concrete positives, analysts said their cautious stance on the name remains unchanged.  ==============================================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.