Police seized at least 20,000 boxes of the counterfeit drugs and several tonnes of raw materials in the crackdown that lasted for more than three months, authorities in Zhejiang province's Huzhou City said.
The drugs were sold to nearly 30 provinces and municipalities across China and the total selling price topped 100 million yuan (USD 16.11 million), state-run Xinhua news agency reported.
Among the best-sold counterfeit drugs were slimming capsules and painkillers that contained banned ingredients, authorities said in a statement.
Police said many customers complained of health problems after taking the drugs.
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A 30-something woman surnamed Li said the slimming drugs she bought in March were quite effective at the beginning and she lost several kilogrammes.
"But in a few months, my heart rate was faster than normal, I lost my appetite and suffered insomnia," she said.
As complains mounted, police in Huzhou began to investigate an online store called "Liu Lulu Milk's Cosmetics", run by a woman surnamed Liu and her husband.