India's Dr Reddy's posts worst week in 3 years as semaglutide setback stokes growth fears
- Supplies of its generic semaglutide would remain unavailable in India and face disruptions in Canada until at least late October
Dr Reddy’s Laboratories logged its steepest weekly loss in three years on Friday, after a disruption in generic semaglutide supply raised concerns it could lose its edge in the highly competitive diabetes market.
On Thursday, the company said supplies of its generic semaglutide would remain unavailable in India and face disruptions in Canada until at least late October, after an impurity issue in the drug’s active ingredient halted production of new batches.
At least five brokerages cut their price targets on the Indian drugmaker’s stock since the announcement, according to data compiled by LSEG, and at least three lowered earnings estimates. Analysts warned that the disruption could weaken pricing power, dent market-share gains and slow earnings growth.
Dr Reddy’s stock slid as much as 3.7% before trimming losses to settle 1.8% lower at 1,246.50 rupees. It fell 9.3% on the week, making it the benchmark Nifty 50’s second-worst performer.
India’s Dr Reddy’s sees semaglutide supply disruption lasting until at least late October
BofA analysts said the timing of supply resumption would be critical, warning the setback could prevent Dr Reddy’s from capturing high-value volumes during a limited-competition period in Canada.
Approvals in key emerging markets such as Brazil and Turkey, along with post-resumption demand trends, would be closely watched, they added.
Systematix said the disruption could erode Dr Reddy’s first-mover advantage in the semaglutide segment, with competition intensifying in India, home to the world’s second-largest diabetic population, as well as in overseas markets.
“I think the first-mover advantage looks like it is no more,” said Shrikant Akolkar, pharma analyst at Nuvama Institutional Equities.
“I think it is a win for other companies who are left in the market. If these companies have a clear product, this temporary withdrawal by Dr Reddy’s will benefit them.”
The Hyderabad-based drugmaker markets semaglutide under the brand name Obeda.
Rivals Zydus Lifesciences and Sun Pharmaceutical Industries have also launched competing versions.