When Roche delayed its planned $4.8 billion purchase of gene therapy developer Spark Therapeutics for the fifth time earlier this week, citing the Federal Trade Commission's (FTC's) review of the deal, one burning question emerged among pharma watchers: What the heck is the FTC’s problem?

When Roche delayed its planned $4.8 billion purchase of gene therapy developer Spark Therapeutics for the fifth time earlier this week, citing the Federal Trade Commission's (FTC's) review of the deal, one burning question emerged among pharma watchers: What the heck is the FTC’s problem?

Shortly thereafter, another troubling question bubbled up: If the FTC is going to be this nitpicky about one giant pharma company’s effort to buy a relatively small player, could that end up scuttling future deals?

Bloomberg surveyed nine firms that specialize in mergers and acquisitions, and six of them said they're worried the FTC has changed its approach to reviewing deals. A similar majority said the change—which has yet to be fully understood—could give future dealmakers second thoughts.

"You have to start wondering if this scrutiny will slow down or prohibit these kinds of deals, which would be a huge deal for the sector," said Brad Loncar, CEO of Loncar Investments, in an interviewwith Bloomberg.

Roche has not provided any details about what’s holding up its Spark acquisition, but some analysts have speculated it may have something to do with Roche’s hemophilia A drug Hemlibra and two gene therapy products Spark is working on to treat the same disease. Hypothetically, Roche and Spark could combine products in reimbursement discussions with insurers to squeeze out BioMarin’s competing therapy in hemophilia A patients who don’t have factor VIII inhibitors, suggested Jefferies analyst Michael Yee in a note to clients.

The FTC’s monopoly fears have already dampened one big merger this year. In June, Bristol-Myers Squibb said that as part of its $74 billion merger with Celgene, it had agreed to sell off the blockbuster psoriasis drug Otezla. That prompted Jefferies to dash off a note to investors with a stark warning: "We believe this is a (potential) read-through that the FTC is being tougher on regulating competition."

Now analysts are wondering how the FTC’s newfound scrutiny could affect 2019’s other megadeal, AbbVie’s planned $63 billion purchase of Allergan. AbbVie's fast-growing IL-23 inhibitor, Skyrizi, is approved to treat psoriasis and in trials for inflammatory bowel disease. That could be a problem, considering Allergan is in late-stage development with its own IL-23 inhibitor, brazikumab, Credit Suisse analyst Vamil Divan pointed out in a recent note to investors.

Then there’s the question of whether the FTC’s tough-on-competition stance could discourage Big Pharma companies from taking out smaller players. A recent survey by RBC Capital Markets analysts turned up several likely acquisition targets, including uniQure, Biohaven and Blueprint Medicines. But uniQure is another gene therapy player that’s working on hemophilia, and that could raise questions among potential acquirers about whether a takeout would pass FTC muster.

Regulatory red tape is just one challenge that could slow the pace of biopharma M&A in the second half of the year. Earlier this week, analysts at Evaluate Vantage reported that the volume of mergers in the sector in the first half of the year plummeted from 83 to 62, and that licensing deals were down, too. The slowdown may have been prompted by a stock market run that has made potential targets unaffordable, they suggested, coupled with an uptick in venture investing in recent years, which has lessened the need for smaller companies to seek out Big Pharma partners.

As for the FTC, it hasn’t shed much light on its process for reviewing the Roche-Spark merger plans. Roche CEO Severin Schwan tried to sooth anxious investors during last week’s second-quarter earnings call, saying he was "very confident" the deal would close by the end of 2019. That may be small comfort, though, considering it was supposed to have been wrapped up by June 30.

Our subscribers rely on FiercePharma as their must-read source for the latest news, analysis and data on drugs and the companies that make them. Sign up today to get pharma news and updates delivered to your inbox and read on the go.

"You have to start wondering if this scrutiny will slow down or prohibit these kinds of deals, which would be a huge deal for the sector," said Brad Loncar, CEO of Loncar Investments, in an interviewwith Bloomberg.

Roche has not provided any details about what’s holding up its Spark acquisition, but some analysts have speculated it may have something to do with Roche’s hemophilia A drug Hemlibra and two gene therapy products Spark is working on to treat the same disease. Hypothetically, Roche and Spark could combine products in reimbursement discussions with insurers to squeeze out BioMarin’s competing therapy in hemophilia A patients who don’t have factor VIII inhibitors, suggested Jefferies analyst Michael Yee in a note to clients.

The FTC’s monopoly fears have already dampened one big merger this year. In June, Bristol-Myers Squibb said that as part of its $74 billion merger with Celgene, it had agreed to sell off the blockbuster psoriasis drug Otezla. That prompted Jefferies to dash off a note to investors with a stark warning: "We believe this is a (potential) read-through that the FTC is being tougher on regulating competition."

Now analysts are wondering how the FTC’s newfound scrutiny could affect 2019’s other megadeal, AbbVie’s planned $63 billion purchase of Allergan. AbbVie's fast-growing IL-23 inhibitor, Skyrizi, is approved to treat psoriasis and in trials for inflammatory bowel disease. That could be a problem, considering Allergan is in late-stage development with its own IL-23 inhibitor, brazikumab, Credit Suisse analyst Vamil Divan pointed out in a recent note to investors.

Then there’s the question of whether the FTC’s tough-on-competition stance could discourage Big Pharma companies from taking out smaller players. A recent survey by RBC Capital Markets analysts turned up several likely acquisition targets, including uniQure, Biohaven and Blueprint Medicines. But uniQure is another gene therapy player that’s working on hemophilia, and that could raise questions among potential acquirers about whether a takeout would pass FTC muster.

Regulatory red tape is just one challenge that could slow the pace of biopharma M&A in the second half of the year. Earlier this week, analysts at Evaluate Vantage reported that the volume of mergers in the sector in the first half of the year plummeted from 83 to 62, and that licensing deals were down, too. The slowdown may have been prompted by a stock market run that has made potential targets unaffordable, they suggested, coupled with an uptick in venture investing in recent years, which has lessened the need for smaller companies to seek out Big Pharma partners.

As for the FTC, it hasn’t shed much light on its process for reviewing the Roche-Spark merger plans. Roche CEO Severin Schwan tried to sooth anxious investors during last week’s second-quarter earnings call, saying he was "very confident" the deal would close by the end of 2019. That may be small comfort, though, considering it was supposed to have been wrapped up by June 30.