By Tim Cocks

KAMPALA, Oct 8 (Reuters) - A factory producing low-cost drugs to treat HIV/AIDS and malaria -- Africa's two biggest killers -- opened in Uganda on Monday.

The factory, which will make the vital three-in-one combination pill used to treat African AIDS patients, is a 50-50 partnership between privately owned local manufacturer Quality Chemicals and Indian pharmaceuticals giant Cipla <CIPLnsc1>.

Quality Chemicals' marketing director George Baguma told Reuters the factory, the first of its kind in Uganda, would start making and distributing generic AIDS drugs immediately.

"It will reduce the cost of treatments in the next three to five years by 30 percent," he said. "It will mean fewer preventable AIDS deaths, fewer AIDS orphans, fewer children dying from malaria."

President Yoweri Museveni -- who has won international praise for his efforts on HIV/AIDS prevention which are credited with cutting Uganda's prevalence from 30 percent to around 7 percent -- attended the factory's opening.

The World Health Organisation says only 40 percent of the 300,000 Ugandans who need life-saving antiretroviral (ARV) treatments are getting them.

Though prices have fallen, ARV treatments still cost $20 per month, beyond the means of many poor Africans and a strain on cash-strapped government budgets.

Baguma said the locally produced drug would probably cost less than $15 a month but he did not have an exact figure.

Malaria remains Uganda's biggest killer, with 80,000 Ugandans, mostly children, dying from it last year.

"Some of us went into this because we lost some of our people to AIDS and malaria. In the villages people are dying every day. It made us say: 'What can we do to stop this?'" Baguma said.

Some other African countries, such as South Africa and Kenya, started producing their own antiretrovirals in the last four years after resolving patent disputes with big Western pharmaceutical companies.

Baguma said the factory was an entirely private sector initiative and is expected to turn a modest profit.

But he added that it would seek support from the Global Fund to Fight AIDS, Tuberculosis and Malaria.

It could eventually sell drugs to neighbouring countries. "Our objective is first to be self-sufficient, then we can look at selling elsewhere," he said.

Baguma said with at least 1.5 million Ugandans infected with HIV, the numbers needing treatment could grow by 100,000 per year.

Locally produced ARVs would also help prevent bureaucratic delays in and cases of AIDS drugs expiring on the shelves after poor coordination between aid agencies and governments, he said.

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