Danaher Corp (DHR.N) on Tuesday cut its annual sales growth forecast for a second straight quarter, signaling that funding crunch in the drug development market was weighing on its biotechnology business.
Shares of the life sciences company fell about 5% in premarket trading.
Danaher’s bioprocessing business has been under pressure as a decline in biotech funding has blunted demand for its tools and services being used in drug development by its biotech and pharmaceutical clients.
The Washington D.C.-based company said it now expects adjusted sales in core operations to rise in low single digits for the full year, compared with its previous forecast of mid-single-digit growth.
Core operations exclude sales from COVID-19 related business.
Funding woes due to rising borrowing costs have crippled several drug developers as investors shun early-stage biotech companies for ones that are already testing therapies or vaccines in humans,
In recent months, early-stage drug developers like Athenex Inc , Codiak Sciences and 9 Meters Biopharma (NMTR.O) have also filed for bankruptcy protection.
For the current quarter, Danaher expects its sales to decline by low single digits compared to last year.
Sales from biotechnology business came in at $1.89 billion for the second quarter ended June 30, missing analysts’ estimate of $2.03 billion, according to Refinitiv IBES data.
However, the company’s total revenue of $7.2 billion beat analysts’ average estimate of $7.12 billion on strength in respiratory testing revenue.
Its diagnostics segment that makes COVID-19 and DNA-based testing kits recorded better-than-expected sales of $2.23 billion, compared with the estimates of $2.08 billion.
Excluding one-off items, the company reported profit per share of $2.05 for the second quarter, beating analysts’ expectations of $2.01 per share.