Dr. Reddy's, in an exchange filing, did not however elaborate on the observations, which typically refer to aspects of the production process that must be improved in order to gain regulatory approval for exports.
A company spokeswoman did not immediately respond to a request for details of the observations on Friday.
The products manufactured at the unit are not currently exported to the European Union, it said.
Germany and the United Kingdom contribute the most to Dr. Reddy's revenue from Europe, which rose 28 percent to 2.08 billion rupees ($32.57 million) in the June quarter.
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