By Kamil Zaheer

NEW DELHI, April 10 (Reuters) - India is "very concerned" that a challenge by Swiss drug giant Novartis AG <NOVN.VX> to local patent law could restrict the global supply of cheap anti-AIDS drugs, its health minister said on Tuesday.

"We urge Novartis to desist from this and withdraw from this," Anbumani Ramadoss told reporters in the Indian capital.

Novartis has gone to the Madras High Court in the southern Indian city of Chennai against a law that blocks the patenting of minor improvements in known molecules.

India is a key source of cheap generic medicines, and advocacy groups worry that millions of poor people could lose access to key drugs if Novartis succeeds in its challenge.

"We are also very concerned about it," Ramadoss said, when asked if the outcome of the court case could affect the supply of affordable anti-AIDS drugs from India.

The Swiss pharmaceutical firm has argued that a tightening of intellectual property laws would increase investment for developing more drugs, and says the Indian patent system stifles innovation.

But Ramadoss warned Novartis that New Delhi could be forced to overrule patents and issue licences for firms to produce vital drugs, if deemed in the public interest.

"India has not used compulsory licensing so far," he said.

"So we shouldn't be pushed towards that."

Last week, the Madras High Court reserved its verdict on the Novartis challenge against the Indian patent system.

It also ordered that another challenge by Novartis to a January decision that rejected its patent application for a cancer drug, Glivec, be referred to an appellate board.

The application was turned down because the drug was a new form of a known substance.

On the wider patent challenge, Medicins Sans Frontieres has said tens of thousands of people being treated for AIDS would suffer if the Swiss firm won its legal battle in India.

The closely watched case in the Madras High Court has become a key battle in the long-running war between multinational drug firms and humanitarian campaigners, who say "big pharma" is putting patents ahead of patients.

India is home to the world's largest population living with HIV/AIDS, an estimated 5.7 million people. (Additional reporting by Manjusha Chatterjee)

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