July 31 (Reuters) - Waters Corp ( WAT ) lowered its

annual profit forecast as it anticipates reduced demand for its

products and services used in drug development and research.

Milford, Massachusetts-based Waters supplies lab equipment

and technology for scientists across the world, with the

majority of its revenue coming in from biopharma clients who use

its tools for research and drug development.

Contract drug manufacturers and equipment makers have seen

sluggish demand as cash-strapped drug developers remain wary of

spending amid multi-decade-high interest rates.

The public funding environment for early-stage biotechs is

expected to improve in the second half of this year, on hopes of

interest rate cuts from the U.S. Federal Reserve in September.

Some analysts have noted that funding for biotechs could

stabilize due to a strong 2023 for regulatory approvals in the

United States.

Earlier this month, larger peer Thermo Fisher Scientific ( TMO )

raised its annual profit forecast, betting on improved

demand for its products and services used in clinical trials.

Waters reported an adjusted profit per share of $2.63 for

the quarter ended June 29, beating estimates of $2.56, according

to LSEG data.

The company expects adjusted profit to be between $11.55 and

$11.65 per share for the year compared to its previous forecast

of between $11.75 and $12.05. Analysts expect annual profit of

$11.78 per share.

Quarterly revenue fell 4% to $708.5 million, ahead of

analysts' estimates of $700.1 million, helped by strong demand

in China and better-than-expected contribution from its

acquisition of peer Wyatt Technology in 2023.

Shares of the company fell about 4% in premarket trade.