Overregulation by the European Commission threatens to "stifle" the Republic's pharmaceutical industry, handing the initiative to its key international rivals, a lobby group for the sector has warned.
New EU carbon dioxide emission limits mean the Republic will soon be operating under a regulatory regime far more severe than that of its chief competitors for investment, Puerto Rico and Singapore, said PharmaChemical Ireland.
Cautioning that the "golden years" of exponential growth in the industry were at an end, Mr Matt Moran, the organisation's director, said the Government must face down EU red tape and rising costs if the sector was to prosper as in the past.
He said: "The jewel in the crown of the Irish economy, currently worth €35.7 billion in exports and employing 24,000 people, will need careful nurturing in the future - otherwise we may see much of its shine fading."
The emergence of China as a global economic power on a par with the United States had handed Singapore, located in the heart of the Far East, a huge advantage over the Republic, said Mr Conor O'Brien, chair of the organisation. He said: "Though Ireland still ranks among the top locations in the world to manufacture pharmaceuticals and chemicals, the competition from locations in Asia such as Singapore, India and China will become increasingly fierce."
A PharmaChemical Ireland report on the sector found overheads have risen sharply over recent years.
The price of natural gas climbed 23 per cent in 2002, local authority charges by 41 per cent in 2001 and insurance premiums by nearly 21 per cent last year.
The survey revealed that though production increased by 11 per cent in 2002, emissions of volatile organic chemicals decreased by 41 per cent in the same period.
Exports slipped 9 per cent to €35.7 billion from €39.3 billion in 2003, the organisation found.
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