A widening scandal over illegal vaccine sales in China has sparked anger and drawn criticism from the government over glaring loopholes in the regulation of the world's second-largest medicine market.

Police detained 37 people in Shandong province, official news agency Xinhua said on Wednesday, after a nearly $90 million black market vaccine ring was exposed.

The vaccines, including ones against meningitis, rabies and other illnesses, are suspected of being sold in dozens of provinces around China since 2011.

The scandal has stirred angry debate, casting a shadow over government ambitions to bolster the domestic drug industry and underlining the challenge it faces to regulate a widespread and fragmented medicine supply chain.

"We don't know if our children have properly had the vaccine or whether it is ineffective or even if they are at risk," said Zhang Jieqi, 32, who works at a tourism company in the city of Chengdu and has a child under two years -old.

She said she was angry that the case, which started early last year, had not been made public widely until now.

The government has said the vaccines themselves were real, although traded illegally.

The issue of regulation, from food and drugs to online sales, has become increasingly contentious in China as it looks to cast off a reputation for poor quality and safety.

However, regulators such as a Food and Drug Administration (CFDA) have pointed to a lack of resources and personnel to adequately regulate their sectors.

The vaccine case drew ire from Premier Li Keqiang, who said regulatory bodies - including the CFDA, health ministry and police - needed to work more in tandem, and that "dereliction of duty" would not be tolerated.

"This vaccine safety case has drawn close attention, and shows there are many gaps in terms of regulation," Li said in a statement posted on the central government's website.

'SWINDLED EVERY DAY'

Some people said the case echoed a scandal in 2008 when milk tainted with the industrial chemical melamine led to the deaths of six infants and made thousands sick.

Xinhua cited the health ministry as saying it had not found any spike in abnormal reactions to inoculations.

The World Health Organization (WHO) said in a statement that improperly stored or expired vaccines rarely cause a toxic reaction and the most common risk is that they are ineffective.

Nonetheless, the case - centered on a mother and daughter illegally selling vaccines to re-sellers around the country - raises questions about regulators, even as China vows to boost its domestic market and raise exports.

Some parents also went online to vent their anger. One mother said she wanted to take her child out of China to escape "poisoned milk, gutter oil and ineffective vaccines". Gutter oil refers to sub-standard, recycled cooking oil.

"It seems every day we are being swindled with something," she wrote on China's the Sina Weibo site, using the handle "Sunziyue".

"No one is coming to sort it out."