Preethi: Dr Reddy’s stock was down 4 per cent on Thursday as Health Canada issued a notice of non-compliance for ANDA of Semaglutide, the weight loss drug.
Arjun: My understanding of pharma is a bit vague. Except for weight loss and ‘down 4 per cent’ I am hazy about other things; can you please elaborate?
Preethi: Sure, lets start with ANDA submissions, which are the bread and butter for Indian Pharma. ANDA – Abbreviated New Drug Application as the name states is simply a shorter dossier for applying for a generic drug. The dossier is shorter because the applicant company is using the research findings of the original applicant or the innovator. Except for rare instances, the generic applicant must establish that the generic will react with the patient in the same manner as the innovator drug, which is establishing bioequivalence.
Arjun: Ok. In Dr Reddy’s case the generic application needed few more details. Is it because of the diabetes segment?
Preethi: No it depends on the molecules and their action. Firstly, there are small molecules and complex molecules for which you make generics. Small you would understand, complex, let me explain. Complex can be biologics, peptides, or inhalations or even some injectables. Semaglutide is a peptide, Glucagon Like Peptide receptor agonist (GLP-1RA) which acts similar to the natural peptide in the gut. One would expect a higher bar for approval as with the case of US FDA which left Cipla, Lupin, Sun Pharma in several review cycles before approval.
Arjun: So if the higher bar is to be expected and several review cycles were the norm, the 4 per cent correction seems a bit overdone don’t you think?
Preethi: That is a matter of perception. Firstly, those review cycles are expected with US FDA, where approval opens several markets including the largest market of US, and is worth the effort. Complications with Health Canada seems to have spooked the market an extra bit where an approval does not carry forward.
Secondly, a lot is riding on Sema for Dr Reddy’s. They have built a lot of backend infra and plan to be the first launcher in several markets. After cold medicine, Insulin for diabetes is the segment that is closest to FMCG industry in pharma nowadays.
Considering the initial hiccups in a high value launch, the reaction seems justified.
Arjun: Yes, considering the importance of the launch, I am willing to stick with the plan of holding the stock.
Published on November 1, 2025
