The company behind a drug that disfigured thousands of newborn babies worldwide ignored and covered up warnings about its damaging effects, a report says.

Hundreds of Australian babies were among those harmed by the German-made sedative and morning sickness treatment thalidomide.

Never-before-published excerpts of files from thalidomide maker Grunenthal obtained by Fairfax explicitly warn about the drug's potential to harm foetuses, Fairfax says.

The company has always maintained the thalidomide tragedy was unforeseeable and it had acted in accordance with the scientific knowledge and prevailing standards of the 1950s.


Fairfax says the Grunenthal files expose a 50-year cover-up.

The effects of taking thalidomide during pregnancy included newborns with severe physical deformities.

The Grunenthal files reveal German medical professionals had been telling the pharmaceutical giant of their concerns about the link between thalidomide and children's deformities for up to two years before the drug was banned in 1961.

One company file shows eight Grunenthal employees or their family members had deformed children between 1959 and 1961.

The company told doctors there was no information suggesting the drug was unsafe, Fairfax says.

Grunenthal continues to deny any culpability as it fights a compensation claim lodged by 130 thalidomide victims in Australia and New Zealand.