The recent annual report from NERA Economic Consulting demonstrates the continued focus by the plaintiffs’ securities litigation bar on health care and life science firms, particularly those focused on the development and commercialization of drugs and devices.

The Report found that, excluding merger objections, the Health Technology and Services sector accounted for 25% of all filings.  While this represented a slight drop in filings against the health care sector in general compared to 2016 and 2017, there was no such drop for firms in the “Drugs” industry (using the Standard Industrial Classification to identify such firms).  In the Drugs industry, 5% of firms were targeted with securities class actions, “mostly related to misleading announcements regarding future performance.”  Indeed, the NERA Report found that, as in recent years, across securities litigation cases in general, “most allegations related to misleading firm performance in 2018 were against firms in the health care sector” and, of those cases, firms in the Drugs industry accounted for two-thirds of such cases.

Despite the continued trend represented by such cases, the NERA Report found that filings targeting foreign companies saw a stark decrease in 2018 compared to 2017, especially in the Health Technology and Services sector.  Whether that trend continues remains to be seen—but the NERA report makes clear that firms in the health care sector in general—and firms focused on the development and commercialization of new drug therapies in particular—will likely continue to face disproportionate rates of securities litigation filings.