Formulation Patents Lose Patent Term Extension Eligibility in Australia: What You Need to Know
The Full Federal Court has unanimously ruled that only patents claiming active pharmaceutical ingredients alone, not formulations, are eligible for patent term extensions (PTEs). This landmark decision overturns previous interpretations and is expected to reshape Australian Patent Office practice. Companies should now adapt strategies for lifecycle management and generic entry.
Key Takeaways
- “Zombie PTEs” : a term recently adopted by the Australian IP community to describe previously granted patent term extensions for formulation patents that are now vulnerable to challenge.
- Impact on portfolios: Originator companies should review their extended patents, especially follow-on formulation patents, to assess exposure.
- Generic strategies: Generics should look for opportunities to proactively challenge invalid PTEs or launch “at risk” based on this vulnerability.
- Regulatory uncertainty: Will the Patent Office exercise its power to revoke invalid PTEs on its own motion.
- Appeal deadline: early January 2026.
Case Background
In Sun Pharma ANZ Pty Ltd v Otsuka Pharmaceutical Co Ltd [2025] FCA 44, Sun Pharma successfully challenged the PTE of Otsuka’s patent for controlled-release formulations of aripiprazole. The Federal Court held that the claims underpinning the PTE were invalid for lack of clarity. Justice Downes, in considering whether the controlled release formulation qualified as a ‘pharmaceutical substance per se’, clarified that a pharmaceutical substance includes not only APIs but also therapeutic formulations.
Otsuka appealed the finding of invalidity, and in response Sun Pharma lodged a notice of contention arguing that the PTE was invalid. On 1 December 2025, the Full Court ruled in Sun Pharma’s favour on the PTE issue in Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161. This is discussed below.
PTE Limited to Active Ingredients: Full Court Clarifies Scope
In this landmark appeal[1], the Full Federal Court confirmed that PTEs in Australia apply only to patents claiming active pharmaceutical ingredients, not formulations. The Court concluded that the term “pharmaceutical substance” refers exclusively to active ingredients.
The Court traced the definition back to the Patents Amendment Bill 1989 (Cth), which restricted eligibility to substances interacting chemically or physiochemically with the human body, effectively limiting it to active ingredients. The Court highlighted that this interpretation was reaffirmed in the context of the current PTE regime introduced by the Intellectual Property Laws Amendment Act 1998 (Cth) and further supported by extrinsic materials.
The Court emphasised that the purpose of PTE is to compensate for the lengthy and costly regulatory approval process for new active ingredients, not for reformulations, which are generally quicker and less expensive to develop. Earlier appellate decisions, including Boehringer[2] and the multiple Alphapharm v Lundbeck decisions surrounding citalopram and its enantiomers[3], were consistent with this view. Notably contrasting with previous first-instance rulings including, Spirit[4], Pharmacia[5] and Cipla[6] where PTEs for formulations were permitted.
The Court concluded: “The relevant pharmaceutical substance is aripiprazole… The Patent claims improved delivery of aripiprazole, a substance already listed on the ARTG.”[7] Consequently, Otsuka’s application for a patent term extension for its controlled-release formulation was revoked.
Otsuka may apply for special leave to appeal the Full Court’s decision to the High Court of Australia. The deadline for doing so is early January 2026. If the High Court grants special leave there would then be one final appellate comment on these issues.
“Zombie PTEs” – The Walking Dead of Patent Extensions
PTEs previously granted for new formulations are now on shaky ground. These “zombie PTEs” remain on the Register but are highly vulnerable to removal. Under section 191A of the Patents Act 1990 (Cth), the Commissioner of Patents has the power to revoke invalid PTEs on their own initiative, without requiring any third-party application. In addition, generic manufacturers and other stakeholders have the option now to file low-cost rectification applications with the Australian Patent Office to remove these extensions, a significant change from the previous position, where removal required re-examination or costly Federal Court revocation proceedings.
So what happens next? It is unclear whether the Australian Patent Office will proactively review and cancel these ‘zombie PTEs’ or will leave the responsibility to generics and other interested parties to identify and challenge them.
Key Next Steps for Innovators and Generics
For innovators, the priority is to audit patent portfolios immediately to identify any formulation-based PTEs that may now be invalid. These extensions could become prime targets for challenge, so originators should assess risk exposure and consider strategies to mitigate potential loss of exclusivity.
For generics and biosimilar applicants, this decision creates a clear pathway to accelerate market entry. Companies should monitor the Register for vulnerable “zombie PTEs” and leverage low-cost rectification applications to remove barriers without resorting to expensive litigation.
Acting early will be critical for both sides; innovators to protect their position, and generics to seize competitive advantage. If you would like tailored advice or assistance in navigating these changes, please contact us.
If you are interested in learning more about Australia’s extension of term provisions, keep an eye out for my colleagues’ article next week which will discuss this area further, along with other recent cases and overall trends.
[1] Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161
[3] Alphapharm Pty Ltd v H Lundbeck A/S [2015] FCAFC 138; 234 FCR 306, Alphapharm Pty Ltd v H Lundbeck A/S [2014] HCA 42; 254 CLR 247, Alphapharm Pty Ltd v H Lundbeck A/S [2008] FCA 559; 76 IPR 618
[4] Spirit Pharmaceuticals Pty Ltd v Mundipharma Pty Ltd [2013] FCA 658;216 FCR 344
[5] Pharmacia Italia SpA v Mayne Pharma Pty Ltd [2005] FCA 1078; 222 ALR 552, Pharmacia Italia SpA v Mayne Pharma Pty Ltd [2006] FCA 305;69 IPR 1
[6] Cipla Australia Pty Ltd v Novo Nordisk A/S [2024] FCA 1414; 185 IPR 299
[7] Otsuka Pharmaceutical Co Ltd v Sun Pharma ANZ Pty Ltd [2025] FCAFC 161 at [129]
