Lab Automation Shifts From Bespoke Integration to Modular Products
Summary
BICO exited large integration projects while Azenta is developing modular stores, showing why bespoke lab automation is difficult to scale profitably.
On November 11, 2026, BICO Group (BCCOY) and Azenta (AZTA) both described the complexity of large custom lab automation projects as an operating burden. BICO is leaving large integrated projects, while Azenta is introducing smaller, modular storage products.[1][2]
One-off engineering makes automation difficult to scale
Large custom automation turns each customer request into a new engineering project. A vendor must combine third-party hardware, redesign interfaces, and then complete installation, validation, and quality remediation. Revenue also depends on milestones from a small number of projects. If a customer delays capital approval, engineering and remediation costs remain while project throughput falls, limiting the vendor's ability to reuse the same investment across customers.
An owned modular platform aims to turn project work into a repeatable product business. A vendor can reuse designs across its own instruments, small or modular stores, software, service, and consumables, reducing on-site integration and dependence on a few large projects. Azenta is keeping its Automated Stores business but plans to launch small ultra-low-temperature stores and modular stores at the end of fiscal 2027. Management expects the more meaningful impact in 2028.[2]
Both companies identify custom projects as an operating drag
BICO's product mix shows that repeatable products are already performing better than large integration projects. Management said a large custom business built on third-party hardware was more difficult to scale than expected because competition, capital intensity, and AI disruption had increased. BICO therefore decided to exit large integrated automation projects.[1] Excluding that business, instrument sales rose 14% and consumables grew 5%, and the company is redirecting resources toward businesses with a clearer competitive advantage and path to profitable growth.[1]
Azenta faces a combination of demand and execution pressure. The company said its Automated Stores business encountered a market pullback and quality problems that hurt both revenue and profitability in 2026. Product quality and booking trends have recently improved, but the new product lines have not yet produced operating results.[2] The companies are taking different actions, but both disclosures point to the same constraint: a model based on one-off design and complex integration is difficult to scale when customers are cautious about capital spending.
The control point is moving toward owned products
Standardization can give a vendor more control over its product roadmap, delivery cadence, and follow-on revenue. An owned architecture reduces reliance on third-party hardware and individual project acceptance, while software, service, and consumables can continue to generate revenue around the same installed equipment. If the transition works, orders, delivery cycles, and margins should become less dependent on a handful of large projects, and cash conversion should become easier to predict.
The evidence does not support a broad collapse in life-science tools demand. Thermo Fisher previously reported stronger pharmaceutical and biotech spending, no significant delays among bioproduction customers, and strong adoption of standardized analytical instruments.[3] The more defensible boundary is a change in project architecture and vendor execution. The next tests are whether Azenta launches its new products on schedule, whether BICO sustains instrument and consumables growth after excluding large projects, and whether margins and cash conversion improve.
Company exposed to the same mechanism
- Thermo Fisher Scientific (TMO): Its standardized instruments and end-to-end workflows fit customers' need to reduce one-off integration risk, but the evidence does not establish that its growth directly results from replacement of custom projects.
Sources
[1] Drillr · BICO Group · November 11, 2026 · Q3 2026 earnings call
"We underestimated what it takes to scale a large customized product business built on third-party hardware in a market that became more competitive, capital-intensive, and disrupted by AI."
[2] Drillr · Azenta · November 11, 2026 · FY2026 Q4 earnings call
[3] Drillr · Thermo Fisher Scientific · July 23, 2026 · Q2 2026 earnings-call summary
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