India’s southern state of Tamil Nadu has cancelled the licences of a cough syrup-maker linked to the deaths of several children over the past month, it said on Monday, as authorities search some of the firm’s sites on suspicion of money-laundering.

At least 19 children died in the central state of Madhya Pradesh after taking the syrup, which was banned after a test this month showed it contained nearly 500 times the permissible limit of diethylene glycol, a toxic chemical.

The medicine was only sold domestically but the incident revives quality concerns about India’s pharmaceutical industry, a major global exporter whose syrups were linked in 2023 to the deaths of 10 children in Cameroon, Gambia and Uzbekistan.

“The manufacturing licenses of Sresan Pharmaceuticals have been completely cancelled, and the company has been shut down,” the state government said in a statement.

Financial crime-fighting agency the Enforcement Directorate (ED) is searching seven premises linked to the company in Chennai, the state capital, on accusations of money laundering, a source said.

Some of these are homes of top officials of the state’s drug control office, said the source, who sought anonymity, as he was not authorised to speak to media.

Telephone calls to seek comment from G. Ranganathan, owner of the Tamil Nadu-based firm, Sresan Pharmaceutical Manufacturer, who was arrested last week, went unanswered.

The ED did not respond to a Reuters request for comment.

India, known as the ‘pharmacy of the world’, supplies 40 per cent of generic medicines used in the United States, and more than 90pc of all medicines in many African nations.

Indian law requires drugmakers to test each batch of raw materials and the final product, but exports of cough syrup must undergo further testing at government-mandated laboratories since 2023.

Last week, the World Health Organisation flagged India’s “regulatory gap” in screening domestically-sold medicinal syrups.

Indian authorities, who have stepped up scrutiny of such syrups since the recent deaths, have also warned against consumption of two more sold domestically, Respifresh and Relife, which were found to contain the same toxic chemical.

These are made by Shape Pharma and Rednex Pharmaceuticals, based in the western state of Gujarat, but officials of neither company responded to calls from Reuters seeking comment.