Baidu seeks to limit damage over fake drugs scandal

Chinese search leader Baidu is picking up the pieces after it admitted selling ads to firms selling fake medicines.

The Nasdaq-listed company's stock price has fallen 42% since the revelation on a state TV program last Saturday.

Baidu's search results do not distinguish between paid and unpaid listings, and instead sells off the top listing to the highest bidder.

It had removed ads of many firms selling drugs online, Baidu said in a statement. However, medical paid search results account for 10%-15% of total revenue.

In a conference call with analysts on Wednesday, CEO Robin Li said he did not believe publication of the ads had damaged the health of consumers.

The revelations come in the wake of the national milk powder scandal, in which 53,000 children have been hospitalised with kidney stones after drinking milk made from contaminated powder.