Dr. Reddy’s halts generic semaglutide supply due to API quality issues

INDIA—Dr. Reddy’s Laboratories has delayed commercial supplies of its generic semaglutide after identifying a quality issue linked to the drug’s active pharmaceutical ingredient (API).

The setback comes at a crucial time as competition intensifies in the fast-growing market for lower-cost versions of Novo Nordisk’s blockbuster diabetes and obesity medicine.

The Hyderabad-based drugmaker disclosed in a regulatory filing that certain semaglutide batches failed to meet quality specifications because of an issue associated with the API.

As a result, the company has paused commercial supplies while it investigates the root cause and implements corrective measures to safeguard product quality.

Dr. Reddy’s stressed that the issue does not affect patient safety or its existing global regulatory filings.

The company added that it remains committed to ensuring reliable global supplies of the medicine once the investigation is complete.

Production pause weighs on market outlook

The announcement unsettled investors, with Dr. Reddy’s shares falling sharply after the disclosure.

The delay also raises questions about the company’s ability to capitalise on the expanding generic GLP-1 market, where several Indian manufacturers are competing for market share.

According to company executives, the quality issue emerged during the validation of expanded manufacturing capacity rather than in products already supplied to patients.

Existing shipments to Canada remain unaffected, but new production has been halted until the problem is resolved.

The company expects supply disruptions in India and future shipments to Canada to continue until at least late October.

Dr. Reddy’s recently launched generic semaglutide in both India and Canada. In Canada, the product is approved for the treatment of Type 2 diabetes.

Competition intensifies in India

Semaglutide is the active ingredient in Novo Nordisk’s branded medicines Wegovy for obesity and Ozempic for Type 2 diabetes.

Following the expiry of key semaglutide patents in India in March, several domestic pharmaceutical companies, including Sun Pharma, Zydus Lifesciences, Cipla, Lupin, Biocon, Natco and Mankind Pharma, introduced or prepared to launch generic versions.

Bloomberg, citing Pharmarack data, reported that Dr. Reddy’s has sold about 31,000 units of its generic semaglutide products, including oral and injectable formulations, since their launch in March.

The current disruption could narrow the company’s early advantage as competitors continue expanding their presence in India’s growing GLP-1 market.

Analysts have already revised earnings expectations and lowered price targets for the company, citing concerns that prolonged supply interruptions could benefit rival manufacturers.