Media reports say China is investigating a Swiss pharmaceutical company on suspicion of exploiting the panic over a mysterious illness in southern China. The company allegedly promoted one of its medicines improperly.

The reports quoted Chinese authorities Monday as saying they were investigating the Swiss pharmaceutical giant, Hoffman-La Roche, Ltd.

The reports say the company's employees in the city of Guangzhou are accused of exaggerating the effectiveness of one of its drugs, and of violating a Chinese law forbidding companies from holding press conferences or promotional meetings to introduce new medicines.

Official media reported that Roche representatives held a press conference in Guangzhou on February 9, in the midst of the outbreak of a mysterious form of pneumonia there. Several hundred people were reportedly stricken with the disease and five are said to have died, causing widespread panic in the city for several days.

The reports say the Roche employees stated that the disease could have been caused by a deadly form of bird flu. They reportedly said one of Roche's drugs, Tamiflu, was a suitable treatment.

Following the press conference, the reports said, rumors spread rapidly via the Internet and phone text SMS (Short Message Service) messages that the mystery illness was chicken flu, and sales of Tamiflu reportedly multiplied.

Horst Kramer, a Roche spokesman in Switzerland, says "an informal breakfast meeting" was organized by his staff on February 9, to inform the public to avoid using the limited available supply of Tamiflu for the wrong ailment.

He said Roche had a responsibility to educate people about correct usage of its drugs. "But suddenly on February 13, a mobile phone short message, an SMS, popped up, and it was spread and it was saying ... 'Tamiflu is the effective drug for chicken flu B-2'," said Mr. Kramer. "Roche has not been connected at all to this activity."

Mr. Kramer said the authorities had not contacted Roche's offices in China regarding any formal investigation.

A statement faxed by Roche in China to the Associated Press stated that Roche was "a company with a high social responsibility," and would take action "against those who used the company's name to spread rumors and harm its reputation."

"As a health care company highly active in the area of prescription drugs," said Mr. Kramer, "it is absolutely mandatory [for] all of us, all of our staff, to adhere to the local regulations in regard to the promotion of prescription medicine, and we put a lot of emphasis that everybody adheres to the local regulation in the given country. So far we have no indication that Roche is involved in this SMS that on its own triggered the publicity."

A Chinese foreign ministry spokesperson says the situation in Guangzhou is now under control, and that some patients have been released from the hospital. She would not comment on the allegations against Roche.