Dr. Reddy's shares fell about 9 percent after a Q1 FY27 earnings miss and a ₹2.4 billion provision tied to out-of-spec semaglutide batches. Levi & Korsinsky opened a securities investigation on July 31 into whether investors were adequately informed. The provision is roughly $28.6 million.
Dr. Reddy's Laboratories shares fell about 9 percent on July 22 after the drugmaker reported a Q1 FY27 earnings miss and disclosed a ₹2.4 billion provision tied to out-of-spec semaglutide batches.
"There is no impact on the product's existing global regulatory filings," Chief Executive Officer Erez Israeli said on the earnings call, adding there was "no patient-safety impact associated with product already supplied to the market."
The provision, roughly $28.6 million, follows Dr. Reddy's earlier statements highlighting semaglutide approvals and launches, including Obeda in Canada and oral semaglutide approval in India. Levi & Korsinsky opened a securities investigation on July 31 into whether investors were adequately informed about the batch issue, the related provision, and the financial exposure before the shares dropped.
The investigation centers on statements Dr. Reddy's made in materials furnished on July 22, when the company published first-quarter results. The New York law firm is reviewing whether the drugmaker's disclosures adequately captured the quality-control problem and its potential cost to shareholders. Investors who bought RDY securities and suffered losses may be eligible to participate, with eligibility based on purchase date and documented losses rather than whether they still hold the shares.
The drop and probe could pressure the stock further and raise legal costs for the Hyderabad-based drugmaker, which is competing in the fast-growing GLP-1 weight-loss market against Novo Nordisk and Eli Lilly. Semaglutide, the active ingredient in Novo's Ozempic and Wegovy, anchors one of the most sought-after drug classes, and Dr. Reddy's has been expanding its presence through launches in Canada and India. The company's push into the category reflects a broader race among generic and biosimilar makers to capture share as branded GLP-1 drugs face patent expirations.
The decline puts the stock under scrutiny as investors assess the financial exposure from the provision and the risk of further regulatory findings. The company did not disclose whether additional batches were affected or whether the provision could grow. Investors will watch for any regulatory action on the semaglutide filings and for further disclosure on the provision's scope in coming quarters.
This article is for informational purposes only and does not constitute investment advice.
