When British and Irish Lions rugby union coach Warren Gatland prepared his 37-man squad to tour Australia last month, he decided that freezing his players would give them an edge.
Exhausted from mauling, scrummaging and lineout routines, the players would drag their 244-pound-or-so bodies into a mobile cryotherapy chamber provided by Germany’s Linde AG (LIN) to recover under minus 140 degrees Celsius. While increasing blood flow in George North, Sam Warburton and Jonathan Sexton, the nitrogen-fueled module with the size of a recreational trailer also offers performance-enhancing properties for Linde.
The three-month old cryotherapy unit, part of Linde’s industrial gases division, shows how the company is pushing into new markets to reduce reliance on more cyclical products such as supplying oxygen and other gases to welders and steel plants. Following last year’s $3.8-billion purchase of U.S. respiratory therapy company Lincare, Chief Executive Officer Wolfgang Reitzle is targeting new medical-gas offerings.
“You’ve got an aging population, lots of illnesses, lots of smokers, it makes sense,” Heidi Vesterinen, a London-based BNP Paribas analyst who rates Linde neutral, said by phone. “Homecare is a patient-facing business. The rest of the business is industrially exposed, so it can be quite cyclical.”
After buying home-oxygen provider Lincare, the contribution from healthcare to Linde’s sales has risen to 18 percent from 9 percent in 2011. The industry is likely to grow 3 percent in Europe and the Americas, and 5 percent in Asia in the medium term, according to Credit Suisse. Linde, which in 2007 sold its Kion forklifts unit, also acquired Air Products & Chemicals Inc. (APD)’s home care business in January 2012 for $752 million.
Reitzle, who’s 64 years old and scheduled to step down in May 2014, in March forecast the medical-gas market will grow by 45 percent to 16 billion euros by 2020. For hospital and home-based patients, Linde developed new mobile gas cylinders and ventilation systems.
The new products are getting introduced at a time when hospital operators are “under massive pressure” to make their services more efficient and cost effective,’’ Christian Wojczewski, Linde’s health-care business head, said in e-mailed comments. “We are concentrating on developing new products, devices and services along our hospital and homecare business.”
Currently, Linde sports just one mobile cryotherapy chamber, located in the U.K. and available for about $2,265 a day. It’s targeting elite sportspeople initially, though Linde intends to add more vehicles to tap demand among physiotherapists and sufferers of arthritis and multiple sclerosis.
“In an ideal scenario I would like to have at least five,” Stuart Askew, who oversees the cryotherapy unit, said by phone, adding that that number could generate revenue of 5 million pounds annually. “You could then have a central London clinic that could be there for three or four days a month, so that physios can refer and perhaps come with their clients to use the treatment.”
Among the Lions players, who won two out of the three games against the so-called Wallabies during their Australian tour, cryotherapy led to an increase in pre-departure training by about 30 percent, said Adam Beard, the team’s head of strength and conditioning. The team tours every four years, rotating between trips to Australia, New Zealand and South Africa, who have between them won six of the seven rugby world cups.
Chamber vs Ice Bath
“The cryotherapy meant we could increase our pre-season training volume, which is already higher than we would train during a normal week,” Beard said in a phone interview. “The cryotherapy allows you to train more because of the enhanced recovery factors.”
Three minutes in a cryotherapy chamber offers more than 15 minutes in an ice bath, the typical treatment to which elite athletes including British Wimbledon champion Andy Murray subject themselves, since it reaches all muscles in the body. The all-over freeze increases blood flow through the muscles, improving oxygenation and removing toxins which slow recuperation.
“If you feel sore, that takes away from your ability to train hard the next day, and that’s something the cryotherapy helps,” Lions coach Beard said. “You get this rush of endorphins because your body’s saying ‘Wow, we’re out of this extreme temperature, I feel quite good’.”
Since Linde unveiled the Lincare deal, the stock has risen 20 percent in Frankfurt, valuing the company at 27 billion euros, while the Bloomberg European Basic Materials Index added 7 percent. Linde climbed more than 330 percent since Reitzle became CEO in January 2003, with Germany’s DAX index rose 166 percent. Today, Linde was down 0.7 percent as of 10:15 a.m.
Linde, which forecasts earnings before interest, taxes, depreciation and amortization of at least 5 billion euros in 2016 compared with 3.5 billion euros in 2012, is scheduled to report first-half results on July 30.
For Linde’s Askew, the mobile chambers serve primarily to demonstrate the advantages of the technology to encourage customers to install their own chambers. Linde is challenging Air Liquide SA (AI) to be the world’s biggest industrial gases company, and its BOC unit can supply the liquid nitrogen required to achieve the temperature drop.
Each mobile chamber costs around £250,000 including the gas-supply unit.
“The margins of providing product will always far outweigh service provision,” Askew said. “With the economic slowdown, it’s been difficult selling into the U.K.’s National Health Service, so this was an opportunity to expand our services.”
A paucity of English-language evidence and studies means that the NHS is unlikely to approve the treatment for at least two years, according to Askew.
Beard and Gatland, who also train the Welsh national rugby union team, require no more convincing about cryotherapy. They persuaded the Welsh Rugby Union to install its own six-man cryotherapy chamber at the Vale of Glamorgan hotel they use as a training base.
“Team captain Sam Warburton is a huge advocate of cryotherapy,” Beard said. “The players train so hard, they actually look forward to it.”
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