Thalidomide was first marketed in 1957 as a multi-use sedative. It later became popular to treat Morning Sicknessplugin-autotooltip__plain plugin-autotooltip_bigMorning Sickness
Morning sickness, also called Nausea and Vomiting of pregnancy (NVP) is the most prevalent medical condition associated with pregnancy. Studies put the numbers of pregnant women affected at between 50 and 80 percent. Symptoms are persistent, and range in severity from mild nausea to the most severe form of vomiting, known as in pregnancy. By 1961, it was realised that the drug was causing severe malformation of the limbs in infants.
The figures for the total number of people damaged by the drug are disputed - most studies cite the number at around 10,000, but the UK-based Thalidomide Society puts the figure at over 24,000. (Source)
At least 10 different theories have been proposed to provide an explanation of how the drug causes the growth defects. (The latest research suggest that it might be connected to the drug's potential to restrict the growth of newly forming blood vessels.)
Note: Thalidomide is still being prescribed in the treatment of Myelomaplugin-autotooltip__plain plugin-autotooltip_bigMultiple Myeloma
"Multiple myeloma, also known as plasma cell myeloma, is a cancer of plasma cells, a type of white blood cell normally responsible for producing antibodies. Often, no symptoms are noticed initially. When advanced, bone pain, bleeding, frequent infections, and anemia may occur. Complications may include amyloidosis., and some forms of leprosy. The chemical mechanisms by which it helps to treat these diseases has also not yet been clarified.
Further reading from University of Aberdeen, Scotland.