Natco Gains After CDSCO Clears Diabetes Drug Launch

Shares of Natco Pharma Ltd surged nearly 11% on Monday on intraday after the company said it had received government approval to manufacture and market generic semaglutide injection in India.

Launch Planned In March

The sharp move comes days after the Hyderabad-based drug maker announced that it would launch the product in March. Note that Natco said in a statement on Saturday that it has secured approval to manufacture and market generic semaglutide injection in India. The drug is prescribed for adults with inadequately controlled type 2 diabetes mellitus. It is used along with diet and exercise.

Semaglutide belongs to the glucagon-like peptide-1 (GLP-1) receptor agonist class. It helps the pancreas release insulin when blood glucose levels are high. Insulin then directs muscle and fat cells to absorb glucose for energy use. Globally, the molecule is marketed under three brand names, Ozempic, Wegovy, and Rybelsus.

The approval from the Central Drugs Standard Control Organisation (CDSCO), under the Ministry of Health and Family Welfare, allows the company to enter a fast-growing diabetes therapy segment that is drawing multiple generic players.

Competitive Domestic Market

Senior executives told analysts during the third-quarter earnings call that the Indian semaglutide market is expected to be highly competitive.

Natco plans to launch its own brand and out-license the product to two other companies. The company has allocated 350 to 400 medical representatives to promote the product in the domestic market.

Executives said semaglutide is projected to be the primary growth driver for the domestic business. They are targeting more than 20% growth, aided by this launch.

The company develops, manufactures, and distributes generic and branded pharmaceuticals, specialty pharmaceuticals, active pharmaceutical ingredients, and crop protection products.

Strong December Quarter Performance

The approval and planned launch come after Natco’s strong December quarter performance. For the quarter ended December, the company reported:

• A 14.3% year-on-year increase in consolidated net profit to ₹152 crores, compared with ₹133 crores in the same period last year

• A 36.3% revenue increase to ₹647.3 crores from ₹474.8 crores a year earlier

• An earnings before interest, tax, depreciation, and amortisation (EBITDA) of ₹158.7 crores, sharply higher than ₹39 crores in the year-ago quarter

• An EBITDA margin jumped to 24.5% from 8.2%

The metrics reflect improved operating leverage and product mix, based on the reported numbers.

Meaning For Sector And Shareholders

For the sector, the development shows rising competition in GLP-1 therapies in India. Multiple generic launches are expected. This could pressure prices but expand access.

For investors, the stock’s near 11% intraday jump reflects expectations that semaglutide could lift domestic growth beyond 20%, as indicated by management.

For shareholders of Natco Pharma, the approval opens a new revenue stream in a high-demand diabetes drug segment. The timing of the March launch and the scale of domestic and US opportunities will be closely tracked against the company’s recent improvement in revenue and margins.

Sources:

CNBC

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