Sage Derby, say, swallowed by lady with issue (7)
I believe the answer is:
mahatma
'sage' is the definition.
(term for a wise Hindu leader)
'derby say swallowed by lady with issue' is the wordplay.
'derby say' becomes 'hat' (derby is a kind of hat).
'swallowed by' means one lot of letters goes inside another.
'lady with issue' becomes 'mama' (issue can mean offspring).
'hat' inserted within 'mama' is 'MAHATMA'.
(Other definitions for mahatma that I've seen before include "Holy man" , "(Indian) holy person or sage" , "Sage (as e.g. Gandhi)" , "Wise man" , "Hindu leader" .)