David H. Kistenbroker
Chicago +1 312 646 5811
New York +1 212 641 5685
In 2021, securities class action litigation on the whole remained at a steady high, and life sciences companies were, once again, popular targets of such lawsuits1. In this whitepaper, we analyze and discuss trends identified in last year’s filings and decisions so that prudent life sciences companies can continue to take heed of the results.
Plaintiffs filed a total of 59 securities class action lawsuits against life sciences companies in 2021. Filings against life sciences companies in 2021 represented a 17.5 percent decrease from the previous year, but a 19.4 percent increase from five years prior. Of these cases, the following trends emerged:
An examination of the types of cases filed in 2021 reveals continuing trends from previous years.
Courts throughout the country issued decisions in 2021 involving securities fraud actions against life sciences companies, including:
Given the numbers from this and recent years’ filings, and accounting for the COVID-19 pandemic, there is no indication that the filings of securities claims against life sciences companies is going to slow down any time soon. The decisions this year resulted in mixed outcomes, with 19 opinions decided in favor of defendants,3 10 opinions denying motions to dismiss (including one reversal of dismissal on appeal), and eight opinions in which only partial dismissal was achieved.4 In addition, appellate courts also rendered opinions. There was only one appellate court decision rendered, and in that case the Court of Appeals affirmed in part, vacated in part, and remanded for further proceedings. These numbers illustrate how life sciences companies remain attractive targets for class action securities fraud claims. Therefore, companies should continue to stay abreast of recent developments and implement best practices to reduce their risk of being sued.
1 2017 saw a record increase of class action securities litigation overall with 411 cases, up from the 271 securities class actions filed in 2016. In 2020, 324 securities class actions were filed while 210 were filed in 2021.
2 It should be noted that 21 of all 2021 filings fell in more than one category.
3 Throughout this whitepaper, the terms “company” or “defendants” may be used to also include individual officers or directors.
4 The cases were compiled through Westlaw searches of dispositive orders involving the Private Securities Litigation Reform Act (PSLRA) between January 1 and December 31, 2021, and cross-referencing them against filters in the Securities Class Action Clearinghouse filings by “Healthcare.” In many cases, the court dismissed the operative complaint without prejudice and amended complaints are anticipated.
See the results from previous surveys