NERA Economic Consulting recently published their annual report examining trends in securities class action litigation in 2021. Although the report found that filings in 2021 decreased overall, the proportion of claims targeting life science firms increased for the second year in a row, following a spike in suits connected to the COVID-19 pandemic.
The report found that, excluding merger objections, the Health Technology and Services sector (which includes pharmaceutical and biotech firms) accounted for 26% of all securities class action filings for the year, the second-most of any sector. COVID-19-related issues remained a key driver of securities class actions against life science firms: in 2021, a quarter of the 20 COVID-19-related securities class actions targeted companies in the Health Technology sector.
NERA also reported that companies in the Health Services and Technology sector accounted for three of the top ten (and two of the top three) largest securities class action settlements in 2021. The settlements in cases brought against three major pharmaceutical companies described in the report amounted to over $330 million in total settlement value, resulting in those three cases alone accounting for roughly 18% of the aggregate value of all securities class action settlements over the course of the year.
NERA’s report makes clear that life sciences firms remain a top target of securities class action claims. The life sciences industry stands out among all sectors in both the raw number of claims filed and in the size of such claims, making it ever more important that companies in the industry take steps to mitigate these risks, including through thoughtful disclosure of issues in consultation with experienced securities disclosure counsel and ensuring they have sufficient D&O insurance coverage.