A U.S.-French pharmaceutical company was at the heart of an investigation by British authorities on Sunday to try to find the source of an outbreak of highly infectious foot and mouth disease.

A laboratory run by Merial Animal Health Ltd, jointly owned by U.S. drugmaker Merck & Co. Inc and France's Sanofi-Aventis SA, was sealed off and under inspection along with a nearby government-funded laboratory.

The laboratories are around 5 miles from where a herd of cattle was infected on Friday by an uncommon strain of foot and mouth disease, the same strain stored and used by the two labs for research and to develop vaccines.

The head of the government-funded facility, the Institute for Animal Health, said in a statement there had been no breach of security at his laboratory and said the suspect strain had not been used by his scientists for several weeks.

That left open the possibility that the Merial facility, which the government said had produced a batch containing the same strain of virus last month, was the source of the leak.

Merial, a leading animal health firm with 2006 sales of $2.2 billion, said it had complete confidence in its security and its initial investigation had shown no breach in its procedures.

David Biland, managing director of Merial in Britain, said it was too early to say what had caused the outbreak.

Our focus over the last 36 hours has been to cooperate fully with the government and its investigation teams, he said in a statement he read to reporters. Merial said earlier it had suspended further vaccination production as a precaution.

ECONOMIC IMPACT

Attention focused on the labs as a possible source of the infection after the agriculture ministry, known as Defra, said the strain of virus confirmed in the cattle was not one recently found in animals. It was a strain of virus isolated 40 years ago by British biological researchers, it said.

Britain's chief veterinarian ordered an urgent review into biosecurity arrangements at both sites, while Defra emphasized all potential sources of the virus were being investigated.

Environment Secretary Hilary Benn told the BBC the possible link to the laboratories was a promising lead, but we don't know for sure and therefore it is very, very important that people continue to be vigilant.

Defra said about 120 cattle had been culled, including some on a neighboring farm as a precaution. Just two animals have so far tested positive for foot and mouth disease and there were no immediate plans for further culling, it said.

If the cattle were found to have been infected by a leak from one of the laboratories it may reassure Britain's farmers, still reeling from a foot and mouth outbreak in 2001, that the disease can be isolated.

However, it will cause consternation in the scientific community that a highly infectious pathogen, carried on the wind, can escape from a high-security laboratory site.

The foot and mouth crisis six years ago devastated British farming, with more than 6 million animals culled and countrywide tourism affected, at a cost of 8.5 billion pounds ($17 billion).

Prime Minister Gordon Brown, who broke off his holiday to lead the response to the outbreak, chaired another meeting of the government's crisis committee Cobra on Sunday evening to review the investigation. He told Sky News he hoped for results of the investigation at the laboratories within 48 hours.

The previous government, led by Tony Blair, was regarded as slow to react in 2001. This time, officials responded rapidly.

The European Commission said it had banned all live animal exports from Britain, as well as meat and dairy products from the infected area. Further restrictions could be brought in after EU vets meet on Wednesday.

Depending on how long the ban remains in place, the impact on British agriculture could be profound. Industry experts said British exports of livestock and meat were worth about 15 million pounds ($30 million) a week.

(Additional reporting by Ben Hirschler, Adrian Croft in London)

United kingdom