Brazil on Friday triggered a confrontation with western pharmaceutical companies when it threatened to break for the first time the patent on an Aids drugs.

The government told Abbott Laboratories of the US that it had 10 days to agree to a 42 per cent price cut for Kaletra, an anti-retroviral, or it would allow local producers to start manufacturing.

Abbott sells the drug at $1.17 a pill, the health ministry said. Farmanguinhos, a state-owned laboratory, could sell a generic copy for 68 cents.

Humberto Costa, health minister, said: “This is the first time that the government of Brazil has broken a patent on a drug. The patent of the Kaletra medicine is of public interest.”

Aids medicines from other drugmakers could also be threatened. Mr Costa said negotiations were continuing with Merck and Gilead Sciences, both US drugmakers, over a voluntary licence for Aids drugs, Mr Costa said.

Global sales of Kaletra, developed as an Aids treatment that could fight resistant strains of the virus, were $896m last year. Brazil's government gives the drug therapy free to an estimated 170,000 Aids patients.Brazil's threat highlighted the continued pressure on pharmaceutical companies' patents in the developing world, even as some countries, including India, move to comply with World Trade Organisation agreements.

The move was condemned as “troubling” by Ken Johnson, of Pharmaceutical Research and Manufacturers of America, an industry lobby. Although WTO rules allow countries to break patents in certain circumstances involving national emergencies, he said Brazil was spending less money today on Aids drugs than it was five years ago.

Abbott Laboratories also criticised the announcement but said it hoped to work out something that would be better for Brazilian patients.

“We cannot overstate the potential negative impact granting compulsory licences could have on the global discovery and development of future treatments for all disease areas, not just HIV/Aids,” it said.

“The discovery and development of innovative new treatments depends on the reasonable return on investment for existing treatments. Without innovation and new therapies, in the end it is patients who will lose.”

India, where the drug industry blossomed by copying blockbuster drugs, adopted more stringent patent protections on pharmaceuticals this year to come more in line with WTO rules. The change alarmed health and poverty activists, who argued that it could close the supply of life-saving drugs to poor countries.

Although the Brazilian government has repeatedly threatened to break patents as part of its annual price negotiations, yesterday's statement was seen as the most serious yet. “We don't expect a last-minute deal,” a health ministry official said. “Brazil is preparing to produce the anti-viral drug.”