Dr Reddy's Labs shares plunge most in over two years after receiving non-compliance notice for Semaglutide (Ozempic) injection

Shares of the Hyderabad-based drug maker, Dr Reddy's Laboratories, posted their worst day in over two years on Thursday, October 30, after it received a notice of non-compliance from Canadian drug authority for Semaglutide injection which is sold under the brand names Ozempic and Wegovy.

Dr Reddy's Labs shares dropped as much as 5.72%, their biggest single day fall since May, 11, 2023, to hit an intraday low of ₹1,180.90 on the National Stock Exchange.

"We have received a Notice of Non-Compliance (NON) from Pharmaceutical Drugs Directorate, Canada, regarding our Abbreviated New Drug Submission (ANDS) for Semaglutide Injection. The NON outlines requests for additional information & clarifications on specific aspects of the submission. We will submit a response at the earliest and well within the stipulated time period," Dr Reddy's Labs said in an exchange filing.

Semaglutide is an injectable medication used to treat type 2 diabetes and assist with chronic weight management. Sold under the brand names Ozempic and Wegovy, it is a once-weekly subcutaneous injection that helps regulate blood sugar and decrease appetite.

"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. We appreciate the continued support of our stakeholders and will share further updates as appropriate," Dr Reddy's Labs added.

As per data and analysis from IQVIA, the combined global sales of injectable Semaglutide products, Ozempic and Wegovy, reached approximately $26 billion in 2024.

Brokerages have issued mixed views on Dr Reddy’s Labs after the company received a NON from Canada for its generic version of Semaglutide.

Citi raised concerns about mounting setbacks across Dr Reddy’s complex product pipeline.

The generic Semaglutide filing has received a negative review by Canada, and approval stands delayed by at least 8–12 months. With multiple product issues—Semaglutide, Rituximab, Premarin and Iron Sucrose—compounding, the gRevlimid drag may be tough to offset, Citi said.

Nomura and Bank of America (BofA) viewed the Canada delay as a temporary setback. Nomura reduced its FY26–28 EPS estimates by 3–6% to factor in lower Canadian revenue.

Emerging markets can present upside to current estimates, and the stock’s underperformance versus peers over five years makes valuations attractive, Nomura noted.

BofA Securities said that the opportunity is down in Canada but not out.

It expects the approval process to push into FY27 but still sees a launch in the first half of that fiscal year.

“We assume $160 million in FY27 Canada sales—around 15% of EBITDA. With filings in 87 countries, Dr. Reddy’s remains confident of selling all 12 million pens in FY27 even with the delay,” BofA said.

As of 10:10 am, Dr Reddy’s Labs shares traded 4.72% lower at ₹1,192, underperforming the NIFTY50 index which was down 0.42%. The stock was top loser in the NIFTY50 index.