Wall Street: "500 Axed AstraZeneca Reps Are Worth Only 5 Cents"

(MoneyWatch)  Analysts at Leerink Swann believe that AstraZeneca could add five cents in earnings per share for every 500 pharmaceutical sales reps that it fires.

Seamus Fernandez, Jason M. Gerberry and Kathryn C. Alexander wrote in a note to investors that AZ had confirmed reports that it was offering buyouts to all its sales staff, but AZ did not give a number as to how many it wanted to reduce. Here's their back-of-the-envelope math:

Currently, AZN has 5,500 U.S. sales representatives. ... we estimate that 2010 EPS would increase by $0.05 for every 500 sales representatives accepting buyouts ...

The Leerink trio believe AZ will aim to get rid of 1,000 reps:

Reducing U.S. sales force headcount by 500-1,500 could boost 2010 Core EPS by $0.05 to $0.15 assuming a fully burdened average cost of $200K/rep ...

Industry benchmarking suggests to us that AZN could operate efficiently with 4,500 reps (headcount reduced by 1,000).

Their calculations have an interesting qualifier: They believe that losing 1,000 reps will have "no negative impact on U.S. revenue." We'll see.

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