The allegations by the U.S. government's Consumer Product Safety Commission (CPSC) are the latest in a series of regulatory troubles facing Indian pharmaceutical firms in their biggest export market, the United States.
In a U.S. stock exchange filing this week, Dr Reddy's said the CPSC planned to seek civil penalties against the company for allegedly violating rules intended to prevent children from ingesting harmful substances.
The company said any unfavourable outcome could result in "significant liabilities" and added that it disagreed with the allegations. (http://1.usa.gov/YClzdv)
Indian drugmakers have suffered a string of drug recalls and manufacturing quality-related issues that have hurt the reputation of the $15 billion-a-year industry as a supplier of cheap generic drugs, and led to increased scrutiny from regulators.