By Puyaan Singh

Aug 7 (Reuters) -

Contract drug developer Charles River Laboratories ( CRL )

cut its annual forecasts on Thursday as it warned of worsening

demand from drugmakers and a persistently low appetite for

clinical trials from biotech companies.

Shares of the company crashed 16.2% to $191.84, putting

them on track for their worst day in over four years.

Charles River and its peers have been grappling with

soft demand for their services from biotech clients due to a

funding crunch in the past year amid a high-interest-rate

environment.

The company said demand from biotech clients is not

expected to improve in the second half of the year, contrary to

earlier predictions.

CEO James Foster added bookings and proposals from

larger drugmakers declined, likely due to the U.S. Inflation

Reduction Act's provision for the

government negotiating drug prices

, with the trend expected to continue into 2025.

The Massachusetts-based company is also set to implement

restructuring initiatives, which is expected to realize $100

million this year. Foster said the company will align its

capacity and staffing with the anticipated lower demand.

Charles River expects annual adjusted profit to be between

$9.90 and $10.20 per share, compared with its prior expectations

of $10.90 to $11.40 per share.

Analysts on average estimate profit for the period at $10.99

per share, according to LSEG data. The company expects full-year

revenue to decrease by 2.5% to 4.5%, versus its previous

forecast of an increase of 1% to 4%.

Charles River's revenue fell 3.1% to $1.03 billion for the

second quarter but beat Wall Street estimates of $1.02 billion.

On an adjusted basis, the company posted a profit of $2.80

versus estimates of $2.39.