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The recent decision of the Full Court of Australia in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161 represents a significant milestone for patent term extensions, with the Full Court effectively putting an end to patent term extensions for formulation patents in Australia.
Background
What are formulation patents?
As the name suggests, formulation patents claim the specific form, dosage or composition of a pharmaceutical substance.
Common examples of formulation patents therefore include claims over the rate of delivery (i.e. controlled or slow-release formulations) or delivery mechanisms (i.e. capsules, injections, transdermal patches) of an active pharmaceutical ingredient.
Patent Term Extensions in Australia
Under the Australian Patents Act 1990, the standard term for patent protection is 20 years. However, like in many jurisdictions, given the time it takes to get a pharmaceutical product to market, some pharmaceutical patents are eligible for an extension in the patent term of up to 5 years.
The requirements for a patent term extension in Australia include that:
- the patent discloses a "pharmaceutical substance per se";
- that goods containing the substance must be included on the Australian Register of Therapeutic Goods (ARTG);
- there is at least five years between the date of the patent and the "first regulatory approval date" (i.e. more than a five-year delay in getting first regulatory approval); and
- the term of the patent has not previously been extended.
Prior practice regarding Formulation Patents and Patent Term Extensions
Several first-instance decisions in the Federal Court had previously allowed patent term extensions for formulation patents on the basis that they disclosed a "pharmaceutical substance". In general, the guidance from the Australian Patent Office to date has also been that it is possible to be granted a patent term extension for an inventive formulation of a known drug (i.e. a formulation patent).
Otsuka v Sun Pharma: Decision of the Full Federal Court of Australia
In the judgment handed down on 1 December 2025, the Full Federal Court (consisting of three Federal Court Judges) held that formulation patents are not eligible for patent term extensions.
This case involved a challenge by Sun Pharma to a patent term extension granted to Otsuka, in respect of its patent for the formulation of the antipsychotic drug, aripiprazole. Otsuka had marketing approval for two products protected by this patent: (i) a controlled-release injectable formulation of aripiprazole and (ii) a freeze-dried controlled-release formulation.
In the appeal decision, the Full Court overturned various first-instance decisions which held that new formulations of active ingredients already listed on the ARTG were eligible for patent term extensions. Considering the statutory construction of the legislation and its history, the Full Court instead held that the phrase "pharmaceutical substance per se" was intended to be limited to active substances only (i.e. novel active pharmaceutical ingredients) and did not encompass pharmaceutical formulations (i.e. novel forms of existing active ingredients).
As a result, the Full Court held that the patent term extension granted to Otsuka for its formulation patent was invalid.
Practical Consequences & Key Takeaways
This decision provides a significant clarification regarding patent term extensions in Australia.
Key takeaways include:
- Patentees need to know that formulation patents will no longer be granted patent term extensions in Australia.
- Existing patent term extensions to formulation patents may be vulnerable to challenge. The Australian Commissioner of Patents can proactively rectify the Register if satisfied there is an error or defect in an entry (i.e. that a patent term extension should not have been granted) or can do so upon the application of a third party. Patentees should be aware of this in their planning for possible generic entry of products.
- This case provides yet another example of a generic manufacturer challenging a patent term extension held by an originator in Australia. With this decision, we expect to see generics to look even more closely at granted patent term extensions as a way of clearing the path for entry into the market.
We note that Otsuka has sought special leave to appeal this decision to the High Court of Australia as of the 18 December 2025.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
