Rafa Employees Strike Over IPO Payout Dispute

Employees at the established pharmaceutical firm Rafa Laboratories have initiated industrial actions, disrupting operations at their Jerusalem facility. This move follows the company's recent initial public offering (IPO) on the Tel Aviv Stock Exchange, which valued the company at approximately NIS 1.55 billion (around $415 million USD). The workforce is demanding compensation linked to the successful stock market debut, asserting their contribution to the company's valuation.

The dispute emerged less than a month after Rafa's shares began trading publicly. According to a filing with the stock exchange, Rafa employees have commenced 'organizational steps,' including interference with the Jerusalem plant's workflow. This action stems from their contention that they are entitled to a share of the proceeds or benefits derived from the IPO. Rafa's management is reportedly reviewing the legality and scope of these actions to determine an appropriate response.

The IPO saw FIMI Fund, managed by Yishai Davidi, divest a portion of its holdings, generating approximately NIS 518 million (around $138 million USD). Additional sales were made by the heirs of the company's founder, Dr. Baruch (Boris) Levin, totaling NIS 68.3 million (around $18 million USD), and by Chairman Uriel Yehudai, who sold shares for NIS 22.7 million (around $6 million USD). Since the offering, which also included stock options, Rafa's share price has seen a modest increase of about 6%.

Founded in 1937, Rafa Laboratories employs approximately 260 individuals and specializes in the development, manufacturing, and marketing of over 100 pharmaceutical products, both branded and generic. Their portfolio includes well-known treatments for conditions such as head lice (Hadarin), insomnia (Bondormin), diarrhea (Stopyt), stress and anxiety (Even), and Rett syndrome (Dayvio). The company's strategic growth is also significantly driven by its biodefense division.

In the biodefense sector, Rafa produces auto-injectors for emergency use, including defense against chemical warfare agents and immediate treatment for military and civilian casualties. This segment is also focused on developing novel treatments for trauma, pain, and other threats. Notably, the company secured up to $186 million USD in funding from the U.S. Department of Health and Human Services for the development of an auto-injector designed to treat severe bleeding post-injury using TXA. In 2023, Rafa reported revenues of NIS 418 million (around $111 million USD), with 63% from pharmaceuticals and 37% from biodefense, achieving a net profit of approximately NIS 100 million (around $26 million USD).

A spokesperson for Rafa stated, "Rafa's management views its employees as a primary and critical resource for its success. We are engaged in direct and continuous dialogue with the employee representatives and do not conduct labor relations through the media." Conversely, the employees' committee expressed, "Since the company was acquired by FIMI Fund, our rights as employees have only diminished. We are required to perform the duties of departed employees and work numerous overtime hours. It is clear that the policy at Rafa has changed and is expected to change further following its transition to a public company. Precisely because of this, it is natural and appropriate that the employees, who are an integral part of the company's success, receive the opportunity to purchase shares in the company where they have worked diligently for decades."