Bluechiip secures multimillion dollar supply deal with Labcon

Bluechiip ASX BCT supply deal Labcon chip vial
The new agreement extends the existing agreement between Bluechiip and Labcon North America to a three-year term.

Technology company Bluechiip (ASX: BCT) has further validated its modernised sample-tracking technology after striking a supply deal worth US$11.6 million (A$15.9 million) with Labcon North America, a prominent vial manufacturer.

Bluechiip will supply Labcon with its chips and associated hardware and services for the following three years, with an option to be extended up to a maximum of five.

At the current time, Labcon is one of Bluechiip’s original equipment manufacturer (OEM) partners and remains the world’s leading manufacturer of “earth friendly” laboratory consumables.

Last year, the company moulded over 1.4 billion products for major companies in the Life Sciences sector.

The deal supplements an existing commercial relationship between Bluechiip and Labcon which has seen the Australian tech company supplying over A$1 million worth of goods to the US-based company.

In December last year, Bluechiip announced the receipt of orders to supply Labcon with $1 million of chips, readers, software and services, to address markets in the Life Sciences sector, including cryogenics, drug screening, cell therapy and forensics.

Since December last year, Bluechiip has delivered over 290,000 chips to Labcon with today’s deal expected to “extend and modify” the existing agreement between the two companies.

On a broader note, Bluchiip has dramatically increased its partner pipeline in the past year, according to the company’s financial year highlights published earlier this week.

In the last financial year, Bluechiip sold 29 cumulative readers compared to 14 in the previous year. Its product sales tripled from A$140,000 to A$434,000, representing a growth rate of 210%. Turnover has risen from $237,773 to $561,544 last year while the number of chips sold went up from 15,450 to 251,660.

Deal terms

The three-year deal is forecast to generate around US$4.2 million (A$5.8 million) in the first 2 years – US$1.1 million (A$1.5 million) in year one, and US$3.1 million (A$4.3 million) in year two.

An additional US$7.4 million (A$10.1 million) of products and services will be ordered and supplied in the third year, with Bluchiip confirming that an “additional two-year term” could be agreed during the course of the supply agreement.

Another key aspect to the supply deal is that Bluechiip will extend a “preferred moratorium” to Labcon for its Coldpoint Bluechiip-enabled range. The moratorium means Bluechiip will not engage new OEM partners which compete against Labcon’s Bluechiip-enabled products, including its cryogenic vial range.

However, the moratorium does not include existing OEM partnership agreements including Bluechiip’s agreement with Genea Biomedx and Planet Innovation.

“Bluechiip’s unique tracking technology has allowed us to bring differentiated products into the market. We are delighted to have gained a first-mover advantage in the Cryogenic Vial market, where the harsh environment severely compromises existing tracking technologies. Our partnership with Bluechiip continues to evolve and progress and we are very excited about a strong future which will see our two teams working closely together,” said Mr Jim Happ, president of Labcon North America.

The tale of Bluechiip

Bluechiip develops “sample-tracking technology for harsh environments” and is currently progressing a wireless tracking solution for the healthcare and life science, security, defence and manufacturing industries which “represents a generational change from current methods such as labels, barcodes and microelectronic radio frequency identification (RFID) chips.

Bluechiip’s unique and patented MEMS technology facilitates secure wireless sample tracking with integrated temperature readings – for applications in extreme weather environments.

The company claims that its products work reliably in temperatures from -196°C to over +100°C and importantly for customers, is not affected by sterilisation processes or frost build-up.

Bluechiip has vowed to introduce “the new gold standard” in sample tracking and usher in a “generational change” away from traditional technologies that are highly reliant on what Bluchiip believes is outdated technology that is not fit for modern-age requirements such as real-time tracking, reliable verification and low cost.

“This is an extremely exciting announcement for us because it represents our largest ever order. Importantly, it extends our strong and historic partnership with Labcon North America, which has been a loyal and important customer of ours for several years. The agreement will help us build scale as the orders increase over the [next] three years,” said Andrew McLellan, managing director of Bluechiip.

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