This week, the High Court of Australia heard an appeal which will have significant implications for the pharmaceutical sector in Australia. The appeal focuses on Australia’s patent term extension regime and whether it applies to pharmaceutical formulations. Both originators and generics/biosimilars should consider how the outcome of the appeal will affect their patent strategy and launch plans in Australia.
Patent term extensions in Australia
In Australia, a standard patent has a term of up to 20 years. However, as is the case in many jurisdictions around the world, pharmaceutical patentees may, in certain circumstances, apply for a term extension of up to 5 years. This is to offset the fact that the effective lifespan of pharmaceutical patents is often shortened by the regulatory process that precedes product launch.
Which patents are eligible?
To be eligible for a patent term extension under the Patents Act 1990 (Cth) (Patents Act), the patent must disclose and claim one or more ‘pharmaceutical substances per se’. A ‘pharmaceutical substance’ is a substance that is (among other things) ‘for therapeutic use’.
The Australian Patent Office has for many years regarded pharmaceutical formulations — such as combinations of active and inactive ingredients — as ‘pharmaceutical substances’ that are eligible for patent term extension. Australian courts have consistently affirmed this approach, including as recently as December 2024 in Cipla Australia Pty Ltd v Novo Nordisk A/S [2024] FCA 1414 (Cipla) and in February 2025 in Sun Pharma ANZ v Otsuka Pharmaceutical & H. Lundbeck [2025] FCA 44 (both of which we wrote about here).
What is the High Court appeal about?
The High Court appeal relates to formulations of the antipsychotic medicine aripiprazole and whether they are eligible for patent term extension.
The patent at the centre of the appeal, which is owned by Otsuka and was granted a term extension, includes claims for freeze-dried formulations (which must be reconstituted with water before use).
Federal Court: extension allowed
In Sun Pharma v Otsuka, the Federal Court held that the relevant claims were invalid for lack of clarity and definition. However, the Federal Court also accepted — following existing precedent, including Cipla — that a formulation (the combination of an active drug ingredient and inert excipients) could qualify as a ‘pharmaceutical substance per se’ under the Patents Act.
Sun Pharma argued that freeze-dried formulations are not a ‘pharmaceutical substance’ because they are not directly ‘for therapeutic use’ as they must be reconstituted before they can be administered. Justice Downes rejected this argument and emphasised that it is the purpose of a substance that determines whether it is a ‘pharmaceutical substance’ and her Honour held that the purpose of the freeze-dried formulations rendered them a pharmaceutical substance.
Sun Pharma also argued that as the patent also included claims for formulations with ‘process features’ — such as a formulation ‘which upon injection releases aripiprazole over a period of at least one week’ — this meant that the claims were not to a ‘pharmaceutical substance per se’. Justice Downes again disagreed and found that, while the claims referred incidentally to process features, they did so merely to better describe the relevant pharmaceutical substance, and were still properly characterised as claims to a pharmaceutical substance per se.
The Full Court appeal: extension not allowed
Otsuka appealed this decision and in December 2025, the Full Court of the Federal Court of Australia dismissed its appeal in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161. The Full Court found that pharmaceutical formulations are not eligible for patent term extension in Australia, overturning the longstanding position (which we wrote about here).
The Full Court concluded that the term ‘pharmaceutical substance’ is limited to ‘active substances’ and does not include formulations. That conclusion followed a detailed analysis of the current and historical legislation, extrinsic materials and authorities. On that basis, the Full Court concluded that the patent term extension was wrongly granted.
The latest chapter: the High Court appeal
Otsuka applied for special leave to appeal to the High Court of Australia and in March the High Court granted that leave. Written submissions have been filed, and the hearing began on 16 June 2026.
Otsuka argued that the Full Federal Court erred in excluding formulations from the definition of a ‘pharmaceutical substance’ under s 70 of the Patents Act. It contends:
- that the plain and ordinary meaning of the words ‘substance (including a mixture or compound of substances)’ encompasses formulations of an active pharmaceutical ingredient and excipients
- that the Full Court was ‘deflected’ from the statutory text by extrinsic materials and misconstrued the explanatory memoranda of the Patents Act, and
- that excluding formulations from extensions of term serves no discernible statutory purpose and is inconsistent with the scheme's object of compensating for regulatory delay.
Sun Pharma continues to contend:
- that the definition's interaction/action requirements focus on therapeutically active components and that excipients are inert and cannot satisfy those requirements
- that the Patents Act’s explanatory memoranda consistently disclose Parliament's intention to limit the scheme to active substances, and
- that the patent term extension claims include process features and are therefore not to a ‘pharmaceutical substance per se’.
Amicus curiae briefings
The High Court has also accepted two amicus curiae briefings: one supporting Otsuka’s position and another supporting Sun Pharma’s position.
The Institute of Patent & Trade Mark Attorneys submitted that the Full Court's blanket exclusion of formulations creates absurd results — for example, racemic mixtures containing an inactive enantiomer will be ineligible for patent term extensions. It submits that the correct construction requires only that the collective application of the mixture involves the requisite interaction.
On the other hand, the Australian chapter of the Generic and Biosimilar Medicines Association submitted that Otsuka’s construction would permit patentees to progressively extend monopolies through successive reformulations, distorting the balance struck by the extension of term scheme, particularly section 77 which states that ‘… the term of the extension cannot be longer than 5 years’.
What does the appeal mean for the pharma sector?
We anticipate the High Court’s decision will be delivered later this year. We will keep you updated on this important proceeding that will have significant implications for the pharmaceutical sector in Australia, irrespective of the outcome.
If the Federal Court’s approach is adopted, it will definitively affirm the historical approach of Australian courts that patent term extensions are available for a broader range of inventions including for pharmaceutical formulations.
However, if the Full Court’s decision is upheld, the field will shift materially and the validity of many existing patent term extensions will be subject to challenge. This will create new opportunities for generics and biosimilars to bring forward product launches in Australia — whether by challenging existing patent term extensions or by launching ‘at risk’. Conversely, it will require originators to review their patent portfolios to identify potential vulnerabilities and consider how best to defend their market position in the face of challenge.
