The recent decision of the Federal Court of Australia in Regeneron Pharmaceuticals, Inc. v Sandoz Pty Ltd [2025] FCA 1067 marks another victory for generic and biosimilar pharmaceutical companies in Australia, reflecting the changing attitude of the Court when it comes to interlocutory injunctions. 

Until recently, it was relatively easy for pharmaceutical patentees to obtain court-ordered interlocutory injunctions in Australia by arguing that generic/biosimilar entry would disrupt the market and cause lasting harm that would be difficult to remedy with damages alone. However, there has been a notable evolution in how the Federal Court assesses the balance of convenience in pharmaceutical patent disputes, particularly in the context of first generic/biosimilar launches and PBS price dynamics. The Federal Court’s decision in Regeneron shows just how far the balance has shifted in favour of generic and biosimilar pharmaceutical companies. 

Background 

Regeneron, Bayer Consumer Care and Bayer Australia (the Applicants) sought urgent injunctive relief to restrain Sandoz from launching its aflibercept products, AFQLIR® and ENZEEVU® (Sandoz Products), which are biosimilar versions of the Applicants’ EYLEA® products (EYLEA Products). The Applicants alleged that the Sandoz Products would infringe Australian Patent No. 2012205599 (the Patent), of which Regeneron is the patentee. The Patent includes claims that cover use of aflibercept according to a particular dosing regimen to treat angiogenic eye disorders.

Interlocutory injunctions and the balance of convenience

In a patent infringement case, the applicant may request an interlocutory injunction to prevent the respondent from engaging in acts that would allegedly infringe the patent until the trial concludes. An injunction is a discretionary remedy and, as a result, an applicant must convince the court that the “balance of convenience” favours the grant of an interlocutory injunction based on all the circumstances of the particular case. In particular, the court considers whether the prejudice and hardship likely to be suffered by the applicant if the injunction is refused will outweigh the prejudice likely to be suffered by the respondent if the injunction is granted, including consideration of whether final relief (if granted) will adequately compensate the applicant for the loss it will suffer. 

Historically, the Federal Court has tended to lean in favour of granting interlocutory injunctions in pharmaceutical cases to preserve the “status quo” (i.e. to prevent a first generic/biosimilar launch as this was said to so alter the market that it would be difficult to assess the quantum of relief and potentially impossible to fully restore the patentee to the position it had been in before the alleged infringement). 

We discuss below the Federal Court’s decision in Regeneron as it relates to each of the arguments typically raised in Australian pharmaceutical patent cases to support (or defend against) an interlocutory injunction. 

PBS and other price reductions 

Until recently, Australian courts viewed the 25% mandatory statutory price reduction that is applied to an originator product when the first generic/biosimilar is listed on the PBS as being a significant factor weighing in favour of the grant of an interlocutory injunction, as this price reduction would change the “status quo” and there was no guarantee that it would be reversed even if the generic/biosimilar were to be removed from the market (e.g. as a result of a final injunction following a finding of patent infringement). The Applicants made this same argument in Regeneron. 

However, reflecting the turning tide of legal sentiment on this issue, the Court in Regeneron found that, while it was likely a 25% price drop would occur for at least some EYLEA Products on the PBS, the Applicants’ loss as a result of this price drop could be quantified and damages would be an adequate remedy. 

The Applicants also argued that there might be additional price reductions for the EYLEA Products, for example, further price disclosure related reductions, or if Sandoz enters pricing negotiations with the government and agrees to offer a further reduced Approved Ex-Manufacturer Price (AEMP). However, the Court did not accept that this was a significant factor. The Court found that, as biological drug products, further price discounts were expected to be minimal compared to typical small molecule generics due to limited biosimilar competition, restricted pharmacist substitution options, and little incentive for ophthalmologists to switch products.

International reference pricing 

The Applicants argued that once the EYLEA Products move Formulary (from F1 to F2) on the PBS, certain special agreements between the Applicants and the Government would cease, meaning the effective price (as reduced by the 25% PBS price drop) would become publicly available and could then be used by international pricing regimes (e.g. in the USA or Taiwan) to reduce the price for EYLEA Products in other countries around the world. The Court dismissed this argument due to a lack of corroborating evidence of sufficient certainty to prove: 

1. that the international price reductions would actually occur and how relevant international laws would be applied (e.g. there was uncertainty concerning application of a US Executive Order);
2. the nature, size and consequence of those price reductions if they did occur;
3. that the price reductions would be as a result of the launch of the Sandoz Products in Australia (rather than, for example, as a result of another biosimilar marketed in another reference country); and
4. the relevant market conditions in each country (e.g. whether other biosimilars were already approved). 

Originator's loss of market share 

The Court considered whether biosimilar uptake drivers would encourage use of the Sandoz Products, taking into account unique aspects of biosimilar and VEGF antagonist (e.g. aflibercept) markets, such as high barriers to entry and challenges for biosimilars to gain market share. 

For example, the Court found that there is not a significant pool of undiagnosed patients or diagnosed but untreated patients for the approved indications for the EYLEA Products. As such, while there would likely be some loss of market share, that loss would be capped and Sandoz would likely only capture new treatment-naïve patients and any patients transferring from other VEGF antagonists. The Court also found that if the Applicants succeeded at trial, they would likely reclaim the market share temporarily held by Sandoz Products (largely because of the established reputation of the EYLEA Products).

Originator's loss of revenue 

The Court found that the main loss the Applicants were likely to suffer would be a loss of revenue due to the PBS price drop, which could be compensated by a damages award. In reaching this conclusion, the Court rejected the Applicants’ arguments that launch of the Sandoz Products was likely to lead to job losses and reduced patient support by the Applicants, noting that the Applicants were working to transition ophthalmologists and patients to a new EYLEA Product (an 8mg dosage form), which currently has no approved biosimilar in Australia (the Sandoz Products being in 2 mg dosage forms).

Biosimilar's loss of "first mover advantage" 

Sandoz argued that being the first biosimilar to enter the market would give it a significant and lasting advantage, and that this was especially the case for biosimilar products (compared to small molecule generics) because prescribers are relatively unlikely to switch patients to a second biosimilar product once initiated on treatment with the first biosimilar.

Sandoz also explained that biosimilar products take much longer to develop, and to obtain regulatory approval. As such, launching the Sandoz Products immediately would give Sandoz a significant competitive edge over other biosimilar contenders, who might otherwise be in a position to launch at the same time as Sandoz if an injunction were granted. 

Finally, Sandoz noted the possibility that the Applicants could themselves launch an “authorised biosimilar”, which would change the status quo, rob Sandoz of its first mover advantage, and make the calculation of relief difficult. 

The Court ultimately agreed with Sandoz. The Court held that the first mover advantage could have a major impact on Sandoz’s market share, and was a relevant factor in assessing the balance of convenience.

Changing market dynamic 

A significant factor weighing against the grant of an interlocutory injunction was the Court’s finding that the relevant market conditions could shift dramatically due to accelerated patient migration from the 2mg to the 8mg presentations of the EYLEA Products (spurred on by the Applicants, no doubt in reaction to impending biosimilar competition for the 2mg products), and increased uptake of another VEGF antagonist (VABYSMO®). The Court found that these changes would likely shrink the potential market for the Sandoz Products and, when combined with a loss of the first mover advantage, this would result in Sandoz securing an even smaller share of an overall reduced market. As such, an interlocutory injunction would not preserve the status quo; the status quo was already in a state of flux and changes were likely to continue but could not be accurately predicted.

Lost expenditure 

Sandoz argued that if an interlocutory injunction was granted, its packaging and product costs for the Sandoz Products would be wasted and the stock may need to be destroyed. The Court, however, held that parties who enter the market knowing the risks of patent infringement and being subject to an injunction, cannot rely on such losses to resist an injunction, and gave no weight to Sandoz’s sunk packaging costs, in assessing the balance of convenience.

Key lessons 

The Court found that calculating the loss Sandoz would suffer if an interlocutory injunction was granted would involve more unknowns and significant speculation as to market impact. Conversely, if Sandoz entered the market and was later found to have infringed the Patent, the financial impact of Sandoz’s launch could be reasonably measured and the Applicants could pursue damages or an account of profits. Ultimately, the Court held that the balance of convenience did not favour the grant of an interlocutory injunction, which was supported by the Court’s assessment of the Applicants’ prima facie infringement case as weak. The characteristics of the biosimilar market, including development times, the regulatory approval process, the issues of encouraging biosimilar uptake, and the nature of the first mover advantage also played a significant role in persuading the Court that the balance of convenience favoured Sandoz’s launch, setting strong foundations for future biosimilar cases in Australia.

While the Applicants have sought leave to appeal this decision to the Full Court, this first instance decision reflects a broader trend in Australia - courts are becoming increasingly reluctant to grant interlocutory injunctions in pharmaceutical patent cases, especially where the restraint could cause disproportionate harm to generic/biosimilar companies or where the relevant market is likely to change even if an injunction is granted.