China closes herbal drug firm linked to deaths

BEIJING (Reuters) - China, battling to restore trust in its products amid a tainted milk scandal, has closed a local pharmaceutical company whose herbal injections have been linked to the deaths of three people.

China last month expanded a product recall for Wandashan Pharmaceutical, a company based in northeastern Heilongjiang province, after the injections caused adverse reactions in six people, three of whom died.

Investigators from China's food and drug watchdog, the State Food and Drug Administration, had found the problem drugs were contaminated with bacteria after being soaked with rain at one of the company's storage areas in southwestern Yunnan province.

Rather than dispose of them, employees repackaged them for sale, the watchdog said in a notice posted on its website (www.sda.gov.cn) on Friday.

"Wandashan management's quality awareness was weak, and its packaging and labeling management slack," the SFDA said.

The factory had been ordered to halt all production and the company's owners and "people directly responsible" had been banned from drug production and sales for 10 years.

Calls to the company went unanswered.

The watchdog said the police had detained a sales person among others who could yet face criminal punishment.

The case comes as China grapples with a string of health scares involving melamine-contaminated milk and other dairy products, that have made thousands of infants ill and prompted recalls of Chinese-made goods from around the world.

Melamine, used in making plastic chairs and fertilizers, has been used to cheat nutrition tests, and has since been found in sweets, eggs and animal feed, evidence that it is already entrenched in the food chain in China.

Two companies that were found to have exported eggs with excessive levels of melamine to Hong Kong have been ordered to halt production and have had their export licenses revoked, the Beijing News said, citing the government news office of central Hubei province.

The companies, one based in central Hubei, and the other northeastern Liaoning, had also been referred for criminal prosecution, the paper said.

An unnamed spokesman quoted by the paper said the problem eggs were an "isolated case," but authorities had nonetheless collected local eggs and animal feed for further testing, the paper said.

(Reporting by Ian Ransom; Editing by Nick Macfie)