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China's drug watchdog has ordered officials in drug administration departments to divest themselves of the 3.5 million shares they held in pharmaceutical companies.

Qu Shuhui, disciplinary inspection head of the State Food and Drug Administration (SFDA), told Xinhua Tuesday that this move is a key step to combat corruption in the field of drug administration.

"Drug officials cannot properly supervise a pharmaceutical company that they hold shares in," Qu said. The SFDA had ordered its staff to relinquish their shares, he added.

Apart from the shares, Qu said, SFDA staff registered and handed in gifts and money valued at over 2.6 million yuan (US$325,000).

Twenty-two companies run by SFDA departments will be disconnected from the administration to prevent corruption, said Qu.

The SFDA has been swept up in an anti-corruption investigation since a bribery scandal -- involving China's top drug safety official Zheng Xiaoyu -- hit the headlines.

Zheng allegedly failed to properly supervise the drug market, abused the administration's drug approval authority by taking bribes, and turned a blind eye to malpractice by relatives and subordinate officials, according to the Communist Party of China's Central Commission for Discipline Inspection.

Zheng, who had retired before the exposure and first came under investigation by the anti-corruption watchdog last December, was expelled from the Communist Party of China in March.

Qu said Zheng's case highlighted weaknesses in the current SFDA system such as incomplete laws, inappropriate use of administrative power, a lack of internal supervision, and weak anti-corruption attitudes among officials.

"Zheng's case, followed by a number of deaths linked to shoddy medicines last year, had a very negative public impact, and calls were made for a thorough reform of the SFDA," Qu said.

The SFDA launched a nationwide anti-corruption campaign in mid-January. Measures included selling off officials' shares in pharmaceutical companies, requiring high-ranking officials to change working posts, and revising rules and regulations.

Last month, the SFDA issued eight anti-corruption rules, banning its staff from activities that could easily lead to graft or misuse of administrative power.

According to the rules, officials are no longer allowed to take part in banquets, recreation, and tourism activities that may influence the fairness of procedures. Officials, as well as their spouses and children, are banned from holding stocks in drug companies.

Officials may not accept lecture fees, consultancy fees, expensive gifts, or securities offered by drug companies and intermediate agencies. They must not disclose information concerning drug, health food, or medical instrument applications.

Qu said SFDA will further enhance drug safety supervision by tightening controls on the registration of new medicines and setting up a black list of illegal pharmaceutical advertising.

Shao Daosheng, a researcher with the Chinese Academy of Social Sciences, said China's pharmaceutical industry has become the focus of public dissatisfaction, with fake and unsafe medicines more widespread and hospitals selling unnecessary drugs to patients to pad out their income.

"Big profits in the pharmaceutical field have seen drug officials trading influence for money, and an explosion of commercial bribery," Dao said.

China reported 9,582 commercial bribery cases involving more than 1.5 billion yuan (US$187.5 million) in 2006.

(Xinhua News Agency April 4, 2007)