Generic production of the drugs could slash costs substantially

Health Minister Mongkol Na Songkhla said the step was necessary to make the cost of the medicines - Kaletra and Plavix - more affordable.

The move was criticised by pharmaceutical companies but drew praise from Aids campaigners.

There are about half a million people living with HIV in Thailand.

"We have to do this because we don't have enough money to buy safe and necessary drugs for the people under the government's universal health scheme," Mr Mongkol told reporters.

He said at current prices, Thailand could only afford anti-Aids medicine for a fifth of the country's HIV sufferers.

The minister said the move was permissible under international trade rules in the event of national public health emergencies.

Mr Mongkol said the cost of a generic version of Plavix, a blood-thinning treatment to help prevent heart attacks, would be about a tenth of the cost of the patented product.

Plavix is sold by French-based Safovi-Aventis and US firm Bristol-Myers Squibb Co; Kaletra is produced by US-based Abbott Laboratories.

'Dialogue'

However the move has angered pharmaceutical firms, who said they were caught by surprise.

It is a brave decision

Kannikar Kijtiwatchakul

Medecins Sans Frontieres

But Aids activists welcomed the government's announcement.

"It is a brave decision, despite both anticipated pressure from industry and possible threats to withdraw investments," said Kannikar Kijtiwatchakul, of aid agency Medecins Sans Frontieres.

"The authorities have engaged in dialogue with companies before, but the discounts have been marginal. The licenses will benefit a lot of people and will set an example to other countries who face the same problem."

Mr Mongkol said he was willing to negotiate with the pharmaceutical companies about importing their products at cheaper prices.