By Quentin Sommerville
BBC News, Shanghai
China is to review tens of thousands of drug licences as part of an investigation into a graft scandal.
Some babies died and others became ill due to fake baby milk
The inquiry has already led to the sacking of the head of the State Food and Drug Administration.
According to Chinese media, corruption at the drug agency runs so deep that Beijing is considering closing it down entirely.
Dozens of people across the country have died from illegally produced or fake drugs in recent years.
China's drug supervision system has been exposed as woefully corrupt.
Zheng Xiaoyu, the head of the drug administration, was sacked in 2005 over allegations that he received large bribes to approve drugs.
Now the government has said it will review the licences granted to around 170,000 medicines approved during his tenure.
Last year a sub-standard antibiotic, Xinfu - which was not properly sterilised - led to the deaths of 11 people.
In 2004, 13 babies died of malnutrition after they were fed milk powder that had no nutritional value.
Lax supervision has made it easy for fake drugs to enter the pharmaceutical distribution network.
In Shanghai, a drug company representative is being tried for producing almost $50,000-worth of counterfeit Tamiflu, the bird flu medicine.
Fake copies of the drug were sold across the country.