Note to AZ: Cut 500, grow EPS by 5 cents

Less than two weeks ago, we learned that AstraZeneca was offering buyout packages to all of its sales reps [1]. As yet we still don't know exactly how much of its sales force the drugmaker hopes to shed. But thanks to some calculator-packing analysts, we do know how much the company could benefit financially.

Leerink Swann analysts put their pencils to work and found that AstraZeneca could boost earnings per share by five cents for every 500 sales reps who pack up and leave, BNet Pharma reports. The three analysts--Seamus Fernandez, Jason M. Gerberry and Kathryn Alexander--estimate the drugmaker hopes to cut 1,000 reps. Bracketing that number, and using an average cost of $200,000 per rep, they forecast that "[r]educing U.S. sales force headcount by 500-1,500 could boost 2010 Core EPS by $0.05 to $0.15."

But as BNet points out, the analysts' math depends on one major assumption: That cutting the sales force by 1,000 will not reduce U.S. sales whatsoever. That may be true; we've seen plenty of studies and polls showing that docs actually prefer dealing with fewer reps and/or getting pitches online rather than in person. But we wouldn't take it to the bank.

- read the BNet item [2]

Related Articles:
AstraZeneca sales force gets buyout offer [1]
AZ looks to auto plants for efficiency gurus [3]
AstraZeneca adds 7400 to layoff toll [4]
AZ's Brennan sees "top-line" challenges ahead [5]
Sales reps see scaled-back incentive pay [6]