Australia's drug exports have slumped, falling 30 per cent over the past year to put manufactured medicines way behind the ailing car industry.
An analysis of Australian Bureau of Statistics trade figures released this week found that Australia's pharmaceutical export industry is now worth about $2.5 billion a year, a significant drop from 2012, when it was worth more than $4 billion. 
The latest figures, which Medicines Australia says should be "ringing alarm bells" in the federal government, show drugs have fallen behind car exports, which are worth more than $3 billion. Pharmaceuticals are also on track to drop behind the wine export industry, which is worth just over $2 billion a year.
A Medicines Australia spokesman said the drop was particularly concerning because there was a huge and growing demand in Asia for "safe" medicines.
The global pharmaceutical industry, fuelled in part by demand in China, India and Indonesia, is tipped to be worth almost $1.6 trillion by 2020.
"Australia is set to miss out on an enormous economic and job creating opportunity if our politicians fail to get the policy settings right," the Medicines Australia spokesman said.
"Australia could take advantage of the Asia boom and at least double current medicine exports.
"But with stiff competition from nations such as Singapore and Japan, the time to act is running out."
Medicines Australia has argued that an "increasingly unstable" business operating environment is discouraging companies from investing in Australia.
In a recent submission to a Senate inquiry into Australia's innovation system, drug giant CSL said such countries as Switzerland, Ireland and Singapore, with lower wage costs, less regulation and lower taxation, were better for business than Australia.
"Australia is a relatively unattractive location for entrepreneurial manufacturing," it argued.
The warning from Medicines Australia comes as the advocacy body is at loggerheads with the Abbott government over billions of dollars' worth of savings recently announced for common drugs.
On Friday, a spokeswoman for Industry and Science Minister Ian Macfarlane said the government had identified medical technologies and pharmaceuticals as a "key economic area in which Australia has the best potential to compete internationally and in which we can create new economic opportunities".
She said the government had chosen the sector for one of five new "industry growth centres", which would lift productivity by boosting collaboration between business, industry and science.
She added that the pharmaceuticals sector had been strengthened by a $50 million "manufacturing transition program" and a recently established health industry forum led by Mr Macfarlane and Health Minister Sussan Ley.