Natco Pharma Stock Soars 11% on Semaglutide Approval in 2026

Introduction

Shares of Natco Pharma Ltd. experienced a significant rally on February 16, 2026, climbing as much as 11% after the company announced a key regulatory approval. The Hyderabad-based drug maker received authorization from the Central Drugs Standard Control Organisation (CDSCO) to manufacture and market its generic version of Semaglutide injection in India. This development positions Natco to enter the rapidly growing market for diabetes and weight management drugs, triggering a surge in investor confidence and trading volume.

The Regulatory Green Light

On February 14, 2026, Natco Pharma formally announced it had secured approval from the CDSCO. This clearance allows the company to produce and sell generic Semaglutide, a medication indicated for adults with insufficiently controlled type 2 diabetes mellitus, used as an adjunct to diet and exercise. The company has outlined a clear timeline for its market entry, stating that the product will be launched in India in March 2026. This swift go-to-market strategy underscores the company's intent to capitalize on the high demand for this therapeutic agent.

Immediate Market Reaction

The market responded swiftly and positively to the news. Natco Pharma's stock price surged, logging an intra-day high of ₹914.50 on the BSE. This represented an increase of over 11% from its previous close. The buying frenzy was accompanied by a massive spike in trading volume. On the NSE, trading volume jumped 6.4 times to 43.91 lakh shares compared to its recent average. Similarly, on the BSE, 3.29 lakh shares changed hands, far exceeding the two-week daily average of 41,000 shares. This robust performance stood in contrast to the broader market, with the BSE Sensex remaining relatively flat during the same period.

Strong Financial Foundation

The positive regulatory news comes on the heels of a strong financial performance in the third quarter of the fiscal year 2026. For the quarter ending December 31, 2025, Natco Pharma reported a consolidated net profit of ₹152 crore, a 14.3% increase compared to the ₹133 crore reported in the same period last year. Revenue from operations also saw a substantial rise of 36.3%, growing to ₹647.3 crore from ₹474.8 crore year-on-year. The company's operational efficiency improved significantly, with its EBITDA margin expanding to 24.5% from just 8.2% in the year-ago period.

USFDA Inspection Update

In addition to the CDSCO approval, Natco Pharma recently provided an update on a US Food and Drug Administration (USFDA) inspection. The company received an Establishment Inspection Report (EIR) for its Active Pharmaceutical Ingredient (API) unit in Manali, Chennai. The inspection, conducted from November 17 to 21, 2025, resulted in seven observations. However, the USFDA classified the inspection as Voluntary Action Indicated (VAI), which suggests that the issues identified were not critical and do not require mandatory corrective actions, resolving a point of regulatory uncertainty for the facility.

Competitive Landscape and Patent Hurdles

While the CDSCO approval is a significant victory, Natco's path to market is not without challenges. The company is engaged in patent litigation with Novo Nordisk, the original developer of Semaglutide, challenging its Indian patent. This legal battle introduces a layer of risk, as the launch is contingent on a favorable outcome. The competitive landscape is also intensifying, with other major Indian pharmaceutical companies like Sun Pharma, Zydus Lifesciences, and Dr. Reddy's Laboratories also securing approvals and preparing to enter the generic Semaglutide market. This sets the stage for a highly competitive environment once the patent hurdles are cleared.

The GLP-1 Market Opportunity

The strategic importance of this approval is highlighted by the immense potential of the GLP-1 drug market, to which Semaglutide belongs. This class of drugs is witnessing explosive growth globally for diabetes and obesity treatment. In India alone, the Semaglutide market is projected to grow from $15.8 million in 2024 to $147.5 million by 2035, reflecting a compound annual growth rate of 17.8%. By securing an early approval, Natco is well-positioned to capture a share of this lucrative and expanding market.

Analyst Outlook

Analyst sentiment on Natco Pharma remains cautiously optimistic. The consensus rating is largely 'Neutral', with an average 12-month price target of around ₹970, suggesting a potential upside of 15-20% from its pre-surge levels. However, some divergence in opinion exists, with certain technical indicators leading to a 'Sell' rating from some analysts around the same time. Investors appear to be weighing the significant market opportunity against the unresolved legal risks associated with the product launch.

Conclusion

Natco Pharma's receipt of CDSCO approval for generic Semaglutide is a major positive catalyst, validated by the strong market reaction and the company's solid quarterly performance. This move strategically places the company in one of the fastest-growing therapeutic areas in pharmaceuticals. However, the successful commercialization of the product hinges on navigating the ongoing patent litigation. The planned launch in March 2026 will be a key event for the company and will be closely watched by investors and the industry alike.