Will Natco and Dr. Reddy’s bet on weight-loss drug Ozempic’s copy pay off?

In the face of looming revenue decline from blood cancer medication Revlimid, Indian pharma companies Natco Pharma and Dr. Reddy’s Laboratories are shifting their focus to a promising new frontier: a weight loss drug modelled after Ozempic. This strategic pivot aims to stabilise their growth and set them on a path toward recovery in an ever-evolving market.

Since last week, Natco Pharma’s shares have plunged over 30%, after the company posted weak Q3 earnings, on account of the absence of sales of Revlimid during the quarter. The company reported a sharp 39% year-on-year decline in its revenue (excluding other income) to ₹464 crore in Q3FY25. While the company said that this was a one-off event due to its volume quota for Revlimid ending in September, some investors were notably upset in the company’s earnings call. 

“You have to live with the volatility, that’s the nature of the business,” Rajeev Nannapaneni, the company’s vice-chairman and chief executive officer, told investors during the call. 

The Revlimid cliff

Indian pharma companies like Dr. Reddy’s, Natco, Cipla, Sun Pharma, Zydus and Aurobindo Pharma have cashed in on generic versions of the $8 billion blockbuster drug distributed in restricted quantities in the US since March 2022, per agreements with innovator Celgene’s parent company Bristol Myers Squibb.

Also Read | Natco Pharma Q3 Results 2025: Profit Falls by 37.47% YoY

However, the companies are set to lose exclusivity on distribution of the drug in January 2026. Dr. Reddy’s, which has profited the most from the drug’s sales, and Natco, which led the launch and will see its share of the total Revlimid market grow to 33% by March 2025, will be the most impacted next year, according to analysts. 

While Natco is expecting robust growth from Revlimid sales in FY26, as its market share increases to 33%, brokerage ICICI Direct Research expects a 50-60% drop in profits in FY27, following the waning of Revlimid. 

Dr. Reddy’s, whose ebitda surged from ₹5,140 crore in FY22 to ₹8,301 crore in FY24, significantly profiting from Revlimid sales, is also facing a market share loss in Revlimid.

Also Read | Dr. Reddy’s to focus on complex products for growth to offset Revlimid loss

Now, both companies are eyeing another blockbuster drug–Novo Nordisk’s breakout star Semaglutide, sold under brand names Ozempic and Wegovy, to stave off the Revlimid cliff. 

“Semaglutide is the next thing which will drive growth for the Indian generic pharma companies, considering the opportunity is almost $22 billion globally, and demand has not been met entirely because there is a shortage at the innovator end,” Amey Chalke, pharma research analyst at JM Financial Institutional Securities told Mint. 

The exact market for Semaglutide is estimated to be much larger than $28-29 billion, Chalke said. 

The golden opportunity

Natco has secured first-to-file exclusivity under Paragraph IV for all strengths of Wegovy and key strengths of Ozempic, the Semaglutide pen. This means that if the company clears all legal and regulatory hurdles, it will have a 180-day exclusivity to market generic variants of the drug.

Also Read | Dr Reddy’s Labs Q3 Results: Profit grows 2% YoY to ₹1413 crore; revenue up 16%

In October, Natco’s partner Mylan settled a US patent litigation with innovator Novo Nordisk for generic Ozempic (to be outsourced from Stelis) which registered about $9 billion sales in the US in calendar year 2023, according to ICICI Direct Research. While the US patent for the Semaglutide expires in FY31, the India patent expires next year, and the company is geared for an India launch. 

“If we get all regulatory clearances on time for Semaglutide, we will be able to launch it 1HFY26,” a Natco spokesperson told Mint in an emailed response. 

Dr. Reddy’s is eyeing a Canada launch in January 2026. “I believe we are positioned well to get approval for that period of time,” Dr. Reddy’s CEO Erez Israeli said in an earnings call in January. “Normally, between the time that you submit the product to the Canadian authorities, until you get approval, is 12 to 14 months…So what you’re going to see is probably the sequence in which people will get approval, and we hope to be the first one in the pack,” he added. 

But that’s not all. The pharma major is also looking at India and Brazil as well as other emerging markets where the product is in demand. 

“At present, we at JM Financial Institutional Research see Dr. Reddy’s as one of first few generic filers for semaglutide globally,” Chalke said. 

Is it enough? 

JM Financials estimates that Dr. Reddy’s could clock $100-150 million in Semaglutide sales if they launch in 3-4 markets next year. 

On the other hand, the brokerage is anticipating $700 million from Revlimid sales in the US for the company in the coming year, before loss of exclusivity. 

Dr. Reddy’s has some other products and strategies in place to offset the drop in Revlimid sales. The company is looking at the launch of biosimilar Abatacept in the US by the end of FY27. ““Abatacept is a $3-4 billion product in the US, if Dr. Reddy’s is the only company to launch that product for at least one year, their sales could be upward of $100 million for that product,” Chalke said. 

Together, Semaglutide and Abatacept may be able to substantially offset the Revlimid loss, the analyst said. 

The company also has the recently-acquired nicotine replacement therapy (NRT) portfolio from Haleon plc in Europe, as an additional growth driver. 

Natco pharma has some other key first-to-file products in the pipeline, including Risdiplam Oral Solution for spinal muscular atrophy, and breast cancer drug Olaparib, although the timelines for these are yet to be defined. 

Analysts are divided on the company’s prospects, though. 

“There are products in the pipeline, but there will be a one or two-year gap in between, where the base will be much lower, the profits will be much lower,” an analyst who requested anonymity told Mint. 

In a research note dated 14 February, ICICI Direct analysts said: “We continue to have faith in Natco’s ability to focus on blockbusters which are capable of generating robust cash flows for 3-5 years’ horizon before they fade.” On the other hand, Nuvama analysts said that while the next couple of quarters could witness robust growth due to Revlimid, this is not sustainable in the future. 

“We also note an impressive US launch pipeline, but uncertainty persists around launch and approval timelines. Break-even in the agrochem business in FY26 and the GLP-1 opportunity in India are triggers that can help Natco offset part of the gRevlimid hit in FY27 and beyond,” the Nuvama analysts said in a note dated 13 February. 

Natco believes there will be a drop in earnings in FY27. “That’s the elephant in the room, [we] have to accept that earnings will drop in ‘27 March,” Nannapaneni told investors in an earnings call last week.

There is no dearth of competition when it comes to Semaglutide, with leading generics makers jumping in. Sun Pharma has already undertaken clinical trials for Semaglutide, while Biocon signed an exclusive licensing and supply agreement for Semaglutide commercialization in Brazil with Biomm last year. 

Domestically, innovators Eli Lilly and Novo Nordisk have also indicated potential launches. While Novo Nordisk hasn’t clarified a timeline, Eli Lilly has announced that it will launch its weight loss drug Tirzepatide in India in 2025 at competitive pricing.