Alyson Lam

July 2026

On 16–17 June 2026, the Court heard Otsuka’s appeal in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd. The appeal challenges the Full Federal Court’s finding that formulation patents are not eligible for patent term extensions (PTEs).

The decision, expected in around two-three months, could reshape PTE strategy for pharmaceutical companies, generics and biosimilar entrants in Australia.

What is at stake?

Under the Patents Act 1990 (Cth), a patent can be extended by up to five years if it claims and discloses a “pharmaceutical substance” and the relevant goods are first included in the Australian Register of Therapeutic Goods (ARTG) more than five years after the patent’s effective filing date.

For years, formulation patents covering products that combine active pharmaceutical ingredients (APIs) with excipients were generally treated as PTE-eligible.

The Full Federal Court took a narrower view. It held that “pharmaceutical substance” refers only to APIs, not formulations combining APIs with excipients. That made Otsuka’s PTE for controlled-release aripiprazole formulation claims including 1) injectable and 2) freeze-dried claims invalid.

If upheld, the decision could put more than 700 existing formulation patent PTEs at risk. Originators may lose exclusivity earlier, and generics and biosimilars may enter the market sooner.

Summary of the Arguments

Otsuka said the claim should be assessed as a whole: the relevant integers, together, need only involve the required chemical or physico-chemical interaction with the human body. Sun Pharma said every element of the claim must itself have that interaction.

Otsuka argued that PTEs compensate for regulatory delays, including for new formulations of existing APIs. Sun Pharma argued the law should not extend “blocking” patents after the original API patent expires.

Otsuka also points to safeguards in the Act, the need for formulation patents to remain new and inventive, and the ability of generics to develop non-infringing formulations or obtain protection for their own novel formulations.

What else is before the Court?

The Court may also address the following:

1) whether freeze-dried claims can support a PTE where the reconstituted formulation is applied to a human;

2) whether the claims include an ineligible process limitation; and

3) whether the relevant goods, being a kit comprising a vial of aripiprazole and vehicle and another vial of solvent for injection, contain the substance claimed in the injectable claims.

Sun Pharma says those issues need not be reached if it wins on the main formulation issue, except as relevant to costs. It also seeks to cross-appeal on whether the claims failed to define the invention and lacked clarity because they included a result not inherent in the claimed product.

Take Home Message

If the Full Court’s approach stands, hundreds of formulation PTEs could be affected and the reasoning may reach some first-generation pharmaceutical technologies, including antibody-drug conjugates and gene therapies.

If the High Court overturns the decision, it would restore the broader approach to formulation patent PTE eligibility that has shaped Australian practice for decades. Either way, the judgment will be important for patent term strategy in the pharmaceutical sector.