Thalidomide was first developed by a German pharmaceutical company called Grünenthal in Stolberg near Aachen. The company secured its patent for the drug in 1954, which lasted twenty years.

Clinical trials started by the company led to the promotion of thalidomide for treating respiratory infections as early as 1956. The drug was marketed under the name Grippex, which contained a combination of thalidomide, vitamin C, acetylsalicylic acid, quinine and phenactin.

Researchers at Grünenthal also discovered that thalidomide could relieve morning sickness in pregnant women, which the drug was then marketed for in 1957 under the name Contergan.

In the United Kingdom, the drug was licensed in 1958. However, thalidomide was found to cause deformity in children born to mothers who took the drug and it was withdrawn in the UK during the early 1960s.

Thalidomide caused birth defects across more than 46 nations and affected over 10,000 babies. These babies were born with missing or abnormal limbs, feet or hands. Other defects included abnormal or absent ears, heart and kidney problems, cleft palate, spinal cord defects and digestive system disorders

Thalidomide was the first example of a drug that passed legal specifications and regulations without full evaluation of its safety for use in pregnant and breastfeeding mothers. After 1961, drug regulatory authorities tightened their laws so that any new drug was screened for the potential to cause harm to the unborn baby.

Although the drug was withdrawn in 1961, it was not until 1968 that a compensation settlement for the UK victims was reached with Distillers Company Limited. At the time, around 460 babies were living with this condition in the UK and in Germany, respectively.

Due to the immense negative publicity associated with the drug, research into its potential use ceased for a time. However, the therapeutic properties of this drug were still studied in some parts of the world. In 1964, Professor Jacob Sheskin from Hadassah University Hospital used thalidomide to treat a patient with erythema nodosum leprosum (ENL), a complication of leprosy. The treatment led to favorable results and subsequent clinical trials led to the FDA approving the use of thalidomide for the treatment of ENL in 1998.