By Rishika Sadam
HYDERABAD, July 22 (Reuters) – Indian drugmaker Dr Reddy’s Laboratories missed quarterly profit estimates and warned that semaglutide supply disruptions could weigh on availability in global markets as it pursues regulatory approvals in Brazil, Turkey and Mexico.
The company, which sees semaglutide as a key growth driver in India and select overseas markets, said earlier in July its generic version would remain unavailable in India and disrupted in Canada until at least late October.
An impurity issue in the active ingredient forced it to halt production of new batches in the only two countries where it has secured approval so far.
The setback prompted Dr Reddy’s to cut its fiscal-year semaglutide sales target to 6 million to 7 million pens from 12 million pens estimated earlier. The active ingredient in Danish drugmaker Novo Nordisk’s blockbuster weight-loss drug Wegovy is off patent in India, opening the market to generic drugmakers.
CEO Erez Israeli said the disruption would not affect planned regulatory filings in overseas markets but would delay production scale-up by three to four months despite strong demand.
“When we come back, we will need to allocate the output that we can,” he said in a post-earnings call. “It may affect other markets in that respect.”
Dr Reddy’s booked a one-time provision of 2.39 billion rupees ($24.75 million) for inventory and other costs linked to the disruption during the first quarter.
“The bigger near-term earnings impact is likely to come from lost semaglutide sales and fixed commercial costs during the supply interruption,” Nirmal Bang analyst Niharika Agarwal said. The company sold only 180,000 pens before halting supplies, she added.
Revenue from operations fell 5.5% to 81 billion rupees, missing analysts’ estimate of 81.6 billion rupees, as North America sales slumped 35.3% amid pricing pressure and intensifying competition.
U.S. TARIFF UNCERTAINTY
Adding to concerns over its largest market, U.S. President Donald Trump on Tuesday outlined a phased tariff plan for imported generic medicines, giving drugmakers a two-year window before duties take effect.
“It is not practical to move operations like that to the United States. And obviously, if tariffs are imposed, we’ll have to raise prices,” Israeli said, adding that the company would monitor developments.
Dr Reddy’s would consider investing in the United States, but not in response to tariff pressure, the CEO added.
Consolidated net profit fell 68.7% to 4.44 billion rupees ($45.98 million) in the quarter ended June 30, missing analysts’ estimate of 7.22 billion rupees, according to LSEG data.
Revenue from India rose 16.8% to 17.2 billion rupees. The company expects domestic semaglutide sales to expand broadly in line with the market’s double-digit growth trajectory.
($1 = 96.5650 Indian rupees)
(Reporting by Rishika Sadam and Kashish Tandon; Editing by Eileen Soreng, Dhanya Skariachan and Joyjeet Das)
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