Dr. Reddy’s Laboratories said on Thursday it has temporarily halted commercial production of its generic semaglutide after identifying an issue with the active pharmaceutical ingredient (API). Certain batches of the GLP-1 drug were found to be “out of specification” due to an issue associated with the product’s API, according to the pharma company.

“We are investigating the root cause and taking appropriate measures to ensure product quality,” Dr. Reddy’s said in a regulatory disclosure to the National Stock Exchange of India. “Until the issue is resolved, commercial supplies of the product will be delayed for a certain period of time. There is no impact on patient safety or on the product’s existing global regulatory filings. We remain committed to ensuring reliable global supplies of this important metabolic therapy.”

In a Thursday conference call with analysts, the company said that supplies of its generic semaglutide would remain unavailable in India and face disruptions in Canada, where Dr. Reddy’s launched its generic semaglutide injection in May. The drugmaker also launched the product in its home market earlier this year. However, Dr. Reddy’s noted that existing inventories in India and Canada have not been impacted by the API issue.

CEO Erez Israeli told analysts in Thursday’s call the impurity was detected in API testing in pre-validation batches while scaling up production, and that the company expects to identify the root cause within the next two weeks.

“We are undertaking a thorough investigation to determine the root cause and implement the necessary process improvement,” Israeli said. “Subject to the successful validation, we will resume commercial supply.”

Dr. Reddy’s hopes to supply 6 million to 7 million semaglutide injection pens in the second half of the company’s fiscal year — a significant drop from its earlier estimate of 12 million. Israeli said commercial supply to the market could potentially resume by late October/early November 2026. “Is there a risk that we could fail again? Always.” 

Potential supply chain impacts

India-based Torrent Pharmaceuticals in response to Thursday’s announcement by Dr. Reddy’s said it was recalling selected batches of its Semalix injection pens for technical evaluation as a precautionary measure. Indian contract manufacturer OneSource Specialty Pharma, a Dr. Reddy’s partner, said there would be no material impact on its operations.

“While we stay committed to our long-standing valuable partnership with [Dr. Reddy’s], we have enough demand for the product from other customers, including for Canada, and our capacities are fully committed,” OneSource Specialty Pharma said in a regulatory filing.

Neeraj Sharma, managing director and CEO of OneSource Specialty Pharma, told the Business Standard last month that demand for GLP-1 drugs such as semaglutide is exposing capacity gaps for India’s contract development and manufacturing organizations (CDMOs) across peptide APIs, sterile fill-finish facilities, injector devices, and glass cartridges.

“The market will be constrained by supply, not demand,” said Sharma, who expects capacity constraints to continue for at least two years as the GLP-1 surge is fueled by the recent expiration of semaglutide patents in several markets including India, triggering a rush by generic drugmakers to secure manufacturing partners.

Amid capacity constraints, CDMOs are working to ramp up their manufacturing capabilities to try to keep up with the surging demand. However, due to the explosive growth of GLP-1s some materials are in short supply.

The semaglutide patent cliff presents a “substantial opportunity” for companies in the Chinese generics market, according to a report last year from GlobalData. The firm noted that China’s semaglutide patent expired in March 2026 and pharmaceutical companies in that country are “aggressively preparing their manufacturing capabilities and regulatory approvals to capitalize on this multi-billion-dollar market opportunity.”