Oct 23 (Reuters) - Thermo Fisher Scientific ( TMO ) on

Wednesday raised the lower end of its annual profit forecast,

tweaking it for the third time this year, betting on improved

demand for its tools and services used in drug development.

Contract drug manufacturers witnessed reduced spending from

biotech clients last year, but recent interest cuts could

improve the funding environment for biotechs as borrowing costs

might ease.

Thermo, which had raised its profit forecast range twice

earlier this year, now expects annual profit between $21.35 and

$22.07 per share, compared with previous forecast of $21.29 to

$22.07 per share.

On Tuesday, rival Danaher ( DHR ) beat Wall Street estimates

for profit and revenue, but said that it is not seeing large

improvement in demand from smaller biotechs and flagged weakness

in China.

Thermo Fisher retained its annual revenue forecast in the

range of $42.4 billion to $43.3 billion.

Analysts are expecting a profit of $21.72 per share and

revenue of $42.91 billion for this year, according to LSEG data.

For the third quarter, sales in the company's laboratory

products segment that provides products and services used in

clinical trials and drug development came in at $5.74 billion,

above analysts' expectations of $5.45 billion.

Revenue from that segment makes up more than half of Thermo

Fisher's total sales.

European peer Sartorius last week reported

better-than-expected bioprocessing order intake in its

nine-month results, lifting shares of life sciences firms like

Thermo Fisher, Danaher ( DHR ) and Waters. Citi analysts had

said the results were "a clear positive data point for

bioprocessing players".

On an adjusted basis, Waltham, Massachussets-based Thermo

earned $5.28 per share for the quarter ended Sept. 28, compared

with analysts' expectations of $5.25 per share.

However, its third-quarter revenue of $10.60 billion

fell short of estimates of $10.64 billion.