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The capsules are in demand because they are viewed as being a medicinal 'cure-all'.
The grim trade is being run from China where corrupt medical staff are said to be tipping off medical companies when babies are aborted or delivered still-born.
The Chinese have historically consumed human placentas to improve blood supply and circulation.
Chinese officials are understood to have been aware of the trade and have tried to stop the capsules being exported but thousands of packets of them have been smuggled through to South Korea
According to customs agents, 35 smuggling attempts have been made since August last year involving more than 17,000 capsules disguised as 'stamina boosters'.
Hospitals and abortion clinics in China reportedly pass the remains onto drugs companies when a baby is stillborn or aborted, the South Korean SBS documentary team reported last year.
The San Francisco Times reported that tests carried out on the pills confirmed they were made up of 99.7 per cent human remains.
There is a huge demand for the pills which are thought to enhance stamina. Microwave-dried placenta is also sought after for its alleged 'medicinal' benefits.
However, in reality the human flesh capsules contain super-bacteria and other harmful ingredients.
Chinese newspapers have identified the north eastern provinces as the source of the human flesh capsules, in particular the Jilin region which is close to North Korea.
There have been disturbing reports that some babies were those who had perished in China's notorious 'dying rooms' where youngsters are deliberately left to die because they were born into families that already had the limit of one child in country areas.
The Chinese authorities have confirmed that 38 per cent of women of child-bearing age have been sterilised - but the babies that are aborted do not go to waste because of the sickening trade in using their corpses for purported medicinal purposes.
"Microwave-dried placenta is also sought after for its alleged 'medicinal' benefits. However, in reality the human flesh capsules contain super-bacteria....."
when babies are aborted or delivered still-born.