HONG KONG, Nov 22 (Reuters) - Significant numbers of people living with HIV in central China have developed full-blown AIDS despite receiving free anti-retroviral (ARV) drugs, a leading AIDS researcher said on Thursday.

"Recent studies found that a significant portion of patients still developed AIDS after two years of treatment due to the problem of drug resistance," said Chen Zhiwei, director of the newly-opened AIDS Institute at the University of Hong Kong.

Before moving to Hong Kong, Chen was based in the United States where he collaborated with researchers in China to conduct surveillance on HIV drug resistance. Chen said the patients were in central China, but he did not specify which provinces.

"In the past four years, we have been working on it and trying to understand how the nation provides free HIV drugs to farmers and villagers and what actually happened after those years of treatment," Chen told a news conference.

Hundreds of thousands of farmers in the central Chinese province of Henan were infected in the 1990s through schemes in which people sold blood to unsanitary, often state-run health clinics, making the province the centre of China's AIDS epidemic.

Antiretroviral drugs help keep the HIV virus in check and can prevent the progression to full-blown AIDS. But regimens can be complicated and sufferers can easily develop drug resistance if they miss doses. Those who develop resistance to first-line drugs will have to resort to stronger, more expensive treatments.

However, HIV drug resistance is a difficult problem in China as there are few second-line drugs to choose from due to high costs. Chinese pharmaceuticals are also unable to produce many of them due to patent laws.

Activists say those who can afford it, procure drugs from overseas, while the rest simply wait to die.

Chen said the new AIDS Institute would work on possible AIDS vaccines and try to understand and curb the development of the disease in Hong Kong and China.

The United Nations AIDS agency slashed its global estimates this week of how many people were infected from nearly 40 million to 33 million, mainly due to revised figures from India. But UN officials quickly warned that the world risks a resurgence of the AIDS epidemic if countries let their guard down. (Reporting by Tan Ee Lyn; Editing by Sanjeev Miglani)

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