Patent Term Extensions for Pharmaceutical Formulations in Australia after Otsuka v Sun Pharma

Executive Summary

The Full Federal Court’s decision in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161¹ will materially narrow the availability of patent term extensions (PTEs) in Australia, should an appeal to the High Court affirm the Full Court’s decision.

On the Full Federal Court’s construction of the relevant sections of the Patents Act 1990 (Cth), patents whose key claims are directed to pharmaceutical formulations (i.e., an active pharmaceutical ingredient plus excipients and/or delivery features) will not qualify for a PTE.

This overturns longstanding industry and administrative practice and creates two immediate issues for life‑cycle planning and transactions:

1. existing formulation‑based PTEs may be vulnerable to revocation or challenge; and
2. PTE filing deadlines continue to run even though the High Court has granted special leave to appeal.

In other words, organisations may need to act now to plan for both appeal outcomes.

Background

Otsuka Pharmaceutical Co Ltd (“Otsuka”) is the owner of Australian Patent No. 2004285448 (the “Patent”), entitled “Controlled release sterile injectable aripiprazole formulation and method”².

The patent claims controlled‑release injectable formulations of aripiprazole, a known antipsychotic active pharmaceutical ingredient (API), combined with excipients enabling sustained release and monthly dosing (ABILIFY MAINTENA).

The pertinent claims being the subject of a PTE application are:

• Claim 1 – a claim to a controlled‑release injectable formulation comprising aripiprazole together with formulation components (vehicle, excipients, particle size features, etc.)
  • A controlled release sterile aripiprazole injectable formulation which upon injection releases aripiprazole over a period of at least one week, which comprises: (a) aripiprazole having a mean particle size of about 1 to 10 microns, (b) a vehicle therefor, and (c) water for injection.

• Claim 16 – a similarly framed independent formulation claim directed to the injectable depot composition
  • A sterile freeze-dried controlled release aripiprazole formulation which comprises: (a) aripiprazole having a mean particle size of about 1 to 10 microns, and (b) a vehicle therefor, which formulation upon constitution with water forms a sterile injectable formulation which upon injection releases aripiprazole over a period of at least about two weeks.

These claims were representative of the invention as a whole and were the basis on which the PTE application was made.

The patent was originally set to expire on 18 October 2024, but Otsuka successfully obtained a PTE based on the Australian Register of Therapeutic Goods (ARTG) registration of the controlled‑release injectable formulations, according to the accepted statutory requirements at the time^{3 4}, extending the patent term to 25 July 2029.

Federal Court Decision

In Sun Pharma ANZ Pty Ltd v Otsuka Pharmaceutical Co Ltd [2025] FCA 44⁵, Sun Pharma ANZ Pty Ltd (“Sun Pharma”) challenged the validity of the patent term extension (PTE) granted to Otsuka for its controlled‑release injectable aripiprazole formulation (used in ABILIFY MAINTENA) was wrongly granted and invalid, contending that the asserted claims to the formulations did not in substance claim a pharmaceutical substance per se within the meaning of s 70 of the Patents Act 1990 (Cth) (the “Act”)⁶.

The primary judge accepted Sun Pharma’s arguments that the PTE and the relevant claims were invalid and ordered the PTE to be removed from the register, clearing the way for Sun Pharma’s proposed generic launch.

Full Federal Court Decision

On appeal⁷, the Full Court considered competing arguments about whether Otsuka’s patent for controlled‑release aripiprazole formulations could validly support a patent term extension (PTE): Sun Pharma contended that Australia’s PTE regime is confined to patents claiming an active pharmaceutical ingredient (API) itself and cannot extend to formulation patents combining a known API with excipients, while Otsuka argued that its long‑acting injectable formulations constituted a “pharmaceutical substance” within s 70 of the Act and that the primary judge had erred in revoking the extension.

Nature of the Objection

The Full Court did not seek to invalidate the claims for lack of novelty or inventive step, but rather sought to clarify the concept of what constitutes a “pharmaceutical substance” with respect to qualifying for a patent term extension.

On this point, the Full Court argued that:

• Claims 1 and 16 do not claim a pharmaceutical substance per se within the meaning of s 70(2)(a) of the Act⁸;
• The claims are directed to formulations (i.e. aripiprazole combined with excipients and delivery features); and that
• Such claims cannot support a PTE, regardless of their validity as patent claims.

The Full Court reasoned that:

• Only an API is capable of the chemical or physico‑chemical interaction with the human body contemplated by the statutory definition.
• Excipients and delivery vehicles facilitate administration but do not themselves exert therapeutic interaction.
• The word “per se” requires the substance to be considered by itself, not as part of a composition.

In other words, only the API itself (i.e.,aripiprazole) is capable of the relevant therapeutic interaction contemplated by the statutory definition of “pharmaceutical substance”⁹, and that the inclusion of excipients does not transform the formulation into a qualifying pharmaceutical substance for PTE purposes.

Thus, the Full Court unanimously rejected Otsuka’s construction of the PTE provisions, finding instead that the statutory concept of a “pharmaceutical substance” is limited to active ingredients (or qualifying recombinant DNA products) and does not extend to formulations, with the result that, even though the claims themselves were valid, they could not in substance ground a PTE.

Accordingly, the Full Court confirmed the revocation of Otsuka’s PTE, fundamentally narrowing the availability of PTEs in Australia and establishing that formulation patents are ineligible for term extension under the current legislative scheme.

Departure from Prior Authority and Practice

In view of this, the Full Federal Court’s decision expressly rejects longstanding authority and Patent Office (IP Australia) practice that had treated formulations as eligible for PTEs.

As a result, existing PTEs for formulation patents are now vulnerable to revocation, either through litigation or the Commissioner’s own motion under the relevant section of the Act¹⁰.

High Court Appeal

On 12 March 2026, the High Court granted special leave to appeal the Full Court’s decision, signalling that the issue raises questions of statutory construction with broad commercial significance.

Pending the High Court’s decision:

• IP Australia has temporarily paused processing of PTE requests of those applications it considers would be affected by Otsuka¹¹.
• The availability of PTEs for formulation patents remains legally unsettled.

Takeaways for Applicants/Patentees Pending the High Court Decision

While the High Court appeal is pending, patentees should still consider requesting timely PTE applications for formulation patents, as the Patents Act 1990 (Cth) imposes strict, non‑extendable filing deadlines, and any failure to file a PTE application in a timely manner could permanently extinguish rights if the High Court overturns Otsuka.

IP Australia has indicated that where processing of PTE applications has been paused, and/or where a notice of deficiency has issued, applications will not be refused on the basis of a failure to comply with the prescribed time period. Should the need arise, an extension of time request may be permitted to extend the time for responding.

Where patent applications are currently pending, applicants should consider restructuring claims to isolate an API claim, if the original specification clearly and supportably discloses an API per se.

Conclusion

The Full Federal Court’s decision in Otsuka v Sun Pharma has reshaped Australia’s PTE landscape by excluding formulation‑only patents from eligibility, while a High Court appeal is pending.

Until the appeal is determined, parties should assume the Full Court position applies, act within strict statutory timeframes to preserve options, and proactively reassess portfolio risk, exclusivity forecasts, and dispute strategies.

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1. Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161 (1 December 2025) ↩︎
2. https:// ipsearch.ipaustralia.gov.au/patents/2004285448 ↩︎
3. Section 70(5) of the Patents Act 1990 (Cth) provides that, for the purposes of this section, the first regulatory approval date, in relation to a pharmaceutical substance, is determined on the basis of: (a)  if no pre – TGA marketing approval was given in relation to the substance–the date of commencement of the first inclusion in the ARTG of goods that contain, or consist of, the substance; or (b)  if pre – TGA marketing approval was given in relation to the substance–the date of the first approval. ↩︎
4. In broad terms, a patent can only be extended if it meets all statutory requirements (eligibility, ARTG linkage, and timing):
   1. Eligible subject matter: the patent must relate (i.e., be disclosed in the specification and fall within the scope of the claims) to a pharmaceutical substance per se or a pharmaceutical substance produced by recombinant DNA technology.
   2. ARTG connection: goods containing or consisting of the relevant pharmaceutical substance must be included in the Australian Register of Therapeutic Goods (ARTG).
   3. Minimum regulatory delay: at least five years must have elapsed between the effective filing date of the patent and the “first regulatory approval date” (i.e., the date of the first inclusion of the pharmaceutical substance on the ARTG.
   4. Only one extension: the patent must not previously have been extended.
   5. Strict timing: the PTE request must be filed within the statutory window (generally 6 months of the later of patent grant and the first ARTG inclusion of goods containing/consisting of the pharmaceutical substance), subject to very limited exceptions. ↩︎
5. Sun Pharma ANZ Pty Ltd v Otsuka Pharmaceutical Co Ltd [2025] FCA 44 (5 February 2025) ↩︎
6. PATENTS ACT 1990 – SECT 70 Applications for extension of patent ↩︎
7. Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161 (1 December 2025) ↩︎
8. PATENTS ACT 1990 – SECT 70 Applications for extension of patent ↩︎
9. The term “pharmaceutical substance” is defined in Schedule 1 of the  Patents Act 1990 (Cth) to mean: a substance (including a mixture or compound of substances) for therapeutic use whose application (or one of whose applications) involves: (a) a chemical interaction, or physico-chemical interaction, with a human physiological system; or (b) action on an infectious agent, or on a toxin or other poison, in a human body; but does not include a substance that is solely for use in in vitro diagnosis or in vitro testing. ↩︎
10. PATENTS ACT 1990 – SECT 191A Commissioner’s power to rectify register ↩︎
11. 7.12.1.1 Pharmaceutical Substance per se | IPA Manuals ↩︎