Biosimilars Deals 2021

Otsuka Pharmaceutical Co., Ltd & Ors v Sun Pharma Anz Pty Ltd [2026] HCADisp 46

BREAKING NEWS:  The High Court of Australia today granted special leave to Otsuka to appeal the decision of the Full Federal Court in Otsuka v Sun Pharma [2025].

In a victory for Sun Pharma over Otsuka regarding Sun Pharma’s generic aripiprazole, the Full Court found that a pharmaceutical substance is limited to active pharmaceutical ingredients and PTE eligibility does not extend to formulations combining those ingredients with excipients.

The Institute of Patent and Trade Mark Attorneys of Australia (IPTA) and Medicines Australia (MA) had each filed applications with the High Court seeking to intervene as amici curiae, underscoring the importance of this issue to the pharmaceutical industry.  We have previously commented on that significance here.

Given the significant shift in patent practice that the Full Court decision induced, drug manufacturers and patent professionals alike will follow the progress of Otsuka’s appeal with great interest.  We will report further as the appeal progresses.

For further information about the changes in law and practice in Australia relating to PTE and PI, see our March 2025 Masterclass here.

About Pearce IP

Pearce IP is a specialist, life-sciences focussed, intellectual property/law firm offering lawyers and attorneys in Australia and New Zealand.

In 2025, Pearce IP was honoured by Australasian Lawyer and New Zealand Lawyer as a Top Specialist Firm, 5 Star Employer of Choice, and the “Standout Winner” for Inclusion and Culture (<100 employees).  Pearce IP and its leaders are ranked in every notable legal directory including: Chambers & Partners, Legal 500, IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WTR 1000, Best Lawyers, WIPR Leaders, Best Law Firms, among others.

Pearce IP is the only leading IP firm in Australia and New Zealand with a female founder, and is certified by WEConnect International as women owned.

AstraZeneca AB v Pharmacor Pty Ltd [2026] FCA 88 (16 February 2026)

Introduction

As we have previously reported, Justice Downes of the Federal Court of Australia has set a new record for expedition in the patent dispute between AstraZeneca and Pharmacor, relating to the latter’s generic dapagliflozin.  Ten days after the preliminary injunction (PI) hearing, Justice Downes granted the PI and set the matter down for trial beginning on 31 August 2026.

Aside from the speed with which the case is progressing, the case is of significant interest as it considers the unresolved issue of whether selection patent principles form part of Australian patent law.  The PI orders which the Judge made also include undertakings given by AstraZeneca that go beyond the norm in cases of this type.

Background

The dispute between AstraZeneca and Pharmacor relates to infringement and validity of AU2003237886 (AU886), AstraZeneca AB’s Australian patent for dapagliflozin, the active ingredient of its FORXIGA® type II diabetes treatment.  Pharmacor obtained ARTG registration of generic dapagliflozin products on 14 November 2025 and applied for PBS listing which was due to be granted on 1 April 2026.  AstraZeneca AB filed infringement proceedings on 16 December 2025, with an application for a PI restraining the launch of Pharmacor’s products.  The PI application was heard on 6 February 2026, in the Federal Court’s first sitting week of the year.

The issues in dispute were relatively confined:

• Alleged patent infringement and invalidity: AstraZeneca AB asserted four claims of AU886, which expires in October 2027, but pursued only claims 1 and 2 at the PI hearing. Pharmacor did not dispute that its products fell within the scope of claims 1 and 2, instead defending the allegations of infringement on the ground that the claims are invalid for lack of novelty, lack of inventive step, and not being manner of manufacture.  Pharmacor relied on one prior art publication only: WO 01/27128 (WO128).
• Alleged Australian consumer law contravention: Both AstraZeneca AB and its Australian subsidiary, which supplies FORXIGA® in Australia, alleged that Pharmacor will contravene the Australian consumer law in that, in the absence of any warning, the offer for sale of a generic version would amount to misrepresentations that the generic may be sold without infringing patent rights. While AstraZeneca AB’s Australian subsidiary cannot sue for patent infringement because it is not an exclusive licensee, it can be a party to this related claim under the Australian consumer law claim. If this claim is successful, this related claim would allow the Australian subsidiary to claim damages.

It was common ground at the PI hearing that WO128 discloses a very large range of compounds encompassing dapagliflozin.  Dapagliflozin is also one of the millions of “most preferred” compounds of “Structure 1B” disclosed in this document, but it is not one of 80 specifically exemplified molecules and is not otherwise specifically identified or claimed in WO128.

Evidence was submitted for both parties that dapagliflozin is commercially very important to each of them.

Key Issues

The Judge considered the usual factors relevant to a PI application: the strength of the prima facie case on infringement and whether the balance of convenience favoured the grant of a PI.

As Pharmacor did not dispute that its products fell within the scope of claims 1 and 2, the majority of Justice Downes’ judgment was devoted to considering the strength of Pharmacor’s invalidity attack on these claims and whether this diminished the strength of the prima facie case on infringement.  This consideration was in turn dominated by the Judge’s assessment of the correct legal approach to determining the validity of selection patents under Australian law.

Her Honour’s assessment of the balance of convenience revolved largely around the adequacy of damages to compensate for various categories of harm each party claimed it would suffer should it not prevail.

Consideration

Justice Downes found that, although each ground of invalidity raised by Pharmacor was arguable, none were strong enough to diminish the strength of the otherwise conceded case for infringement.

Novelty

Justice Downes relied on the well-established test for novelty under Australian law being whether the prior art contains “clear and unmistakable directions to do what the patentee claims to have invented”, and whether “carrying out the directions contained in the prior inventor’s publication will inevitably result in something being made or done which … would constitute an infringement of the patentee’s claim” (General Tire & Rubber Co v Firestone Tyre and Rubber Co Ltd (1971) 1A IPR 121; [1972] RPC 457).  Her Honour noted that this test had been applied in Eli Lilly and Co Ltd v Apotex Pty Ltd (2013) 100 IPR 451; [2013] FCA 214, a case in which the Court had relevantly considered whether a disclosure in a prior art document of large numbers of compounds by reference to a chemical formula amounted to an anticipation of a claim in a later patent to a specific compound falling within that formula.  In Eli Lilly, the Judge had held that:

• Bare disclosure of a class of compounds did not destroy novelty in all members of that class;
• Novelty was only destroyed if the prior disclosure was clear and unmistakable enough in giving directions to, and included all the essential integers of, the specific compound later claimed; and
• The disclosure need not be literal or exact if the skilled addressee would add the missing information, as a matter of course (without the application of inventive ingenuity or undue experimentation), that would lead to anticipation.

Justice Downes rejected Pharmacor’s argument that Eli Lilly was essentially incorrect, and that “selection patent principles” should instead be applied, that is, that disclosure of a broad class of compounds destroys novelty in each member unless there is some unexpected advantage or benefit identified for a particular member of the class.  Pharmacor relied on Ranbaxy Australia Pty Ltd v Warner-Lambert Co LLC (2008) 77 IPR 449; [2008] FCAFC 82, a decision of the Full Court of the Federal Court and therefore of higher authority than Eli Lilly.    Justice Downes identified, however, that the Full Court in Ranbaxy did not say that selection patent principles formed part of Australian law.  The Full Court rather considered an alleged misrepresentation to an examiner in which the application of selection patent principles by the examiner was merely part of the context.

As there was no evidence that WO128 contained a specific direction to obtain dapagliflozin, nor that dapagliflozin would be arrived at as an inevitable result, Justice Downes held that the invalidity attack on claims 1 and 2 on the basis of lack of novelty was arguable, but not so strong as to diminish the strength of the prima facie case on infringement.

Inventive step

Justice Downes applied the well-established “modified Cripps question” in assessing whether the claimed invention involved an inventive step, noting that this is the test most routinely adopted including in cases where the prior art discloses a class of compounds encompassing a later claimed compound, such as Eli Lilly.  That question asks whether the notional team at the relevant date in all the circumstances, including knowledge of all the prior art to which it is permitted to refer, would be directly led as a matter of course to try the claimed invention in the expectation that it might well produce a useful or better alternative.

Pharmacor had again argued that a different legal test was appropriate for selection patents and that a “technical advance” is necessary for a selection to be inventive.  It argued that an arbitrary choice from a range disclosed in a selection patent was not inventive, based on UK case law.  Justice Downes stated that, given the lack of any Australian authority supporting this contention, it would be matter for Pharmacor to advance at trial.

In applying the modified Cripps question test, Justice Downes observed that dapagliflozin was not disclosed in WO128, but was disclosed and claimed in AU886.  her Honour considered that the evidence showed that it is a highly prescribed treatment for diabetes and other conditions; and Pharmacor wanted to enter the Australian market and sell products which contained dapagliflozin, rather than select a different compound from WO128 which did not infringe the claims of AU886. Her Honour concluded that, for the purposes of the injunction application, these matters tended to indicate that AU886 disclosed something having an advantage over other compounds were encompassed by the claims in WO128.  This conclusion arguably ignores the fact there are obvious regulatory and commercial advantages in seeking to offer a generic version of an existing drug rather than starting from scratch with a new molecule.  However, in the absence of expert evidence that the common general knowledge would fill the gaps, there was no suggestion in WO128 that would lead a skilled person to dapagliflozin rather than some other compound encompassed by that patent.

Accordingly, Justice Downes concluded that, while Pharmacor’s invalidity attack on claims 1 and 2 on the basis of lack of inventive step was arguable, it did not diminish the strength of the prima facie case on infringement.

Manner of manufacture

Pharmacor submitted that, because AU886 admits that the compound was disclosed within WO128 (albeit in generic terms) and claims it for a use that was also known (treating diabetes), it was not a “new” manner of manufacture but just an old disclosure in another guise.

Justice Downs referred to well-established principles relating to manner of manufacture in the case of pharmaceutical patents that provide that an invention insofar as claimed will be a manner of manufacture if there is a new substance disclosed.  In this case, her Honour found that there appeared to be disclosure on the face of AU886 that describes and claims a “manner of manufacture” being a specific compound structure, i.e. dapagliflozin that was not explicitly disclosed before, including in WO 128, plus detailed methods to make it and use it.

Accordingly, Justice Downes concluded that while Pharmacor’s invalidity attack on claims 1 and 2 on the basis of lack of manner of manufacture was arguable, it again did not diminish the strength of the prima facie case on infringement.

Australian Consumer Law

Justice Downes accepted that it was uncontroversial that Pharmacor might engage in misleading or deceptive conduct, contrary to the ACL, if Pharmacor failed to warn customers, being pharmacists and wholesalers, that their exploitation of Pharmacor’s dapagliflozin products could infringe the AstraZeneca’s patent.  In line with previous case law, her Honour decided that for the purposes of the PI application it was not necessary to consider the ACL claim separately as the ACL case would stand or fall with the patent infringement case.

Balance of convenience

Justice Downes undertook the usual exercise of considering the likely impact on AstraZeneca if a PI  was refused, and the impact on Pharmacor if a PI was granted.

In favour of granting an injunction, her Honour found:

• FORXIGA and other dapagliflozin products were critically important to AstraZeneca in Australia.
• Loss to AstraZeneca’s Australian subsidiary was relevant either as loss to a third party or as a source of loss to the patentee parent company by reason of their corporate relationship.
• In the absence of a PI, AstraZeneca would never be in a position to recover its monopoly, which would be an irreparable harm.
• Pharmacor’s intended PBS listing on 1 April 2026 would have likely triggered a 25% reduction to the price of FORXIGA, causing significant loss of revenue.
• Further statutory price reductions would be likely because of aggressive discounting and incentives commonly employed by generics. In this regard, Justice Downes found it significant that no undertakings were offered by Pharmacor concerning the discounts and incentives which it would offer. The evidence disclosed Pharmacor’s “expectation” as to how it would offer discounts, but as a mere non-binding statement of present intention it could prove wrong if and when other generics entered the market.
• The evidence, including that of Pharmacor, showed a very real possibility of rapid, multiple generic entry prompted by Pharmacor’s own entry which would intensify pricing competition.
• AstraZeneca would lose the opportunity to mount an effective authorised generic strategy. Justice Downes rejected Pharmacor’s contention that AstraZeneca ought to have been prepared for generic competition in Australia ahead of expiry of its Australian patent due to a foreign patent being found to be invalid.
• AstraZeneca offered a range of undertakings to address many of Pharmacor’s concerns and provide protection to its position and that of third parties, including the Commonwealth government. Importantly, her Honour found, there was no undertaking which Pharmacor submitted AstraZeneca should offer which it did not then provide.
• A failure to grant an injunction in the circumstances of this case could cause the patent system in Australia to be undermined, with negative impact on future research and development, and upon the licensing of patented pharmaceutical products.

In favour of refusing an injunction, her Honour found:

• Pharmacor had undertaken to keep accounting records of sales to assist in any claim for an account of profits in the event that AZ succeeded at trial.
• Pharmacor would lose the strategically valuable first mover advantage of being the first generic on the market for dapagliflozin.
• It would be in the interests of the Commonwealth and the public for FORXIGA to be sold at a cheaper price.

Outcome

A PI was granted until the earlier of the determination of the proceeding, the expiry of AU886, or further order of the Court:

1. restraining Pharmacor from dealing or offering to deal in its dapagliflozin products (directly or indirectly) or causing them to be listed on the PBS;
2. requiring Pharmacor to:

a)  notify the Department of Health, Disability and Ageing of the grant of the PI and that it could no longer guarantee supply of its products; and

b)  withdraw its application to list its products on the PBS.

The court orders noted that AstraZeneca had given undertakings:

1. To pay compensation to any person affected by the PI;
2. To notify Pharmacor if it becomes aware of any third party intending to launch a dapagliflozin product in Australia, and to seek a PI against any such third party;
3. To not list under the PBS, or authorise anyone else to list, a product that would trigger the automatic price drop;
4. To not launch or authorise the launch of an authorised generic; and
5. To expeditiously pursue the final remedies it has sought.

Implications

This decision reinforces that, despite relatively few PIs being sought in Australia in recent years, a strong prima facie case for infringement and a good position on validity can still result in a PI being ordered.

Other than the required undertaking as to damages, the undertakings given by AstraZeneca regarding its conduct during the period Pharmacor is enjoined are not typical.  It appears that these undertakings were volunteered by AstraZeneca before the hearing, and may point the way for future applicants for preliminary relief to mitigate some of the factors that would otherwise weigh against them.

Although the ACL claim was given short shrift by Justice Downes, Pharmacor did make some nuanced submissions as to why that claim did not overlap entirely with the patent infringement claim.  We consider that this issue is overdue some closer judicial scrutiny, although that is more likely at a substantive trial than on an interlocutory basis.

About Pearce IP

Pearce IP is a specialist, life-sciences focussed, intellectual property/law firm offering lawyers and attorneys in Australia and New Zealand.

In 2025, Pearce IP was honoured by Australasian Lawyer and New Zealand Lawyer as a Top Specialist Firm, 5 Star Employer of Choice, and the “Standout Winner” for Inclusion and Culture (<100 employees).  Pearce IP and its leaders are ranked in every notable legal directory including: Chambers & Partners, Legal 500, IAM Patent 1000, IAM Strategy 300, MIP IP Stars, Doyles Guide, WTR 1000, Best Lawyers, WIPR Leaders, Best Law Firms, among others.

Pearce IP is the only leading IP firm in Australia and New Zealand with a female founder, and is certified by WEConnect International as women owned.