An analysis of biotech investment in the world's major economies has placed the Republic towards the bottom of the leaderboard and exposed a growing scarcity of seed capital.
The survey by analysts Ernst & Young reveals the number of biotech firms operating here fell to 28 from 32 in 2001.
Biotech industries in the US, Canada and Germany were rated as the world's most dynamic - with Ireland finishing among the stragglers in 20th position, the report said.
Ernst & Young identified a worrying shortage of start-up funds throughout Europe, with total investment falling from €80 billion to €50 billion in the 12 months to January.
The downturn led to a decline in the number of European IPOs - from 39 in 2001 to just six in 2001.
Over a quarter of Europe's publicly quoted biotech companies lost more than two-thirds of their value last year - only a dozen had increased in valuation by the close of 2001.
The findings were described as a wake-up call by the Irish BioIndustry Association, which said the future prosperity of the Irish economy may hinge on the emergence of a dynamic and innovative biotech sector.
For this to happen, domestic players must place greater emphasis in research and development, said Mr Matt Moran, the association's director.
The importance of the biotech industry has been recognised by the Government, which recently allocated €500 million to research projects, said Mr Moran.
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