(Reuters) – Medical equipment maker Thermo Fisher Scientific on Wednesday cut its annual profit forecast, hurt by weak demand for its biopharma services including tools and compounds used to make therapeutics and vaccines.
Shares of the Massachusetts-based company fell more than 6% to $535.01 in premarket trading.
Rising interest rates have squeezed funding needed for drug development programs, weighing on demand for contract research services offered by Thermo Fisher and rival Danaher Corp.
The company now expects full-year earnings to range between $22.28 and $22.72 per share, compared with its previous forecast of $23.70. Analysts on average were expecting a profit of $23.55, according to Refinitiv.
“Economic activity in China slowed, and across the economy more broadly, businesses became more cautious in their spend,” CEO Marc Casper said.
Both Thermo Fisher and Danaher have previously warned of soft demand this year for bioprocessing services required to make therapeutics and vaccines, owing to the funding crunch that biotech clients are facing.
Danaher on Tuesday cut its annual sales growth forecast for the second time, and flagged that growth in China, one of its key markets, had fallen 10% during the quarter.
Thermo Fisher also slashed its annual sales forecast to between $43.4 billion and $44 billion, from $45.3 billion. Analysts were expecting $45.21 billion.
Quarterly sales for the company’s life sciences solutions unit came in at $2.46 billion, missing analysts’ estimates of $2.81 billion.
Thermo Fisher’s overall second-quarter revenue and profit also missed Wall Street targets.
The company reported revenue of $10.69 billion and profit of $5.15 per share, while analysts on average had expected revenue of $10.98 billion and earnings of $5.43 per share.
(Reporting by Bhanvi Satija in Bengaluru; Editing by Maju Samuel)
