The decline in sales of top-selling drugs as they come off patent has acted as a drag on Irish exports in recent years.
What the pharmaceutical industry calls the "patent cliff" is evident again in new figures from the Irish Exporters Association.
In its half year report today, the IEA said that exports over the past six months are down 2% or €1.7 billion compared to the same period in 2012 to €88.6 billion.
The merchandise sector saw the biggest fall in export demand, and contracted by 2.9 billion (6.4%) mainly due to the loss in the value of pharmaceutical exports.
Over that period exports of drugs to the UK fell 32%. That fall coincided with the ending of patent protection for Pfizer's Viagra drug, for which the main ingredient is made in Cork.
However, amid the general fall in manufactured exports, the agri-food and drinks sector continued to see growth and increased export sales by a strong 8%.
The IEA also noted a sharp slowing of growth in services exports, which grew by just 3% compared to 9% the same time last year.
John Whelan, chief executive of the Irish Exporters Association, said the first six months of 2013 were more difficult than had been expected, adding that there was little room for improvement this year.
He said that both merchandise and services exports were heavily affected by the failure of Europe's economies to emerge from the recession of recent years. Europe accounts for 57% of Ireland's agri-food and manufactured goods, while it is also the destination for 64% of our services exports.
''Unless there is a major shift in EU policies, it is fairly certain that our merchandise exports will fall by €5.5 billion or 6% over the full year, and that services exports will grow by €2.7 billion or 3%,'' Mr Whelan said He predicted that in total, exports will fall by €2.8 billion or 1.6% across the year.
The IEA chief executive called for tax changes in the October Budget to make it more attractive for people to invest in industry.
''Specifically, major changes to the investment incentives schemes must be introduced to release funds into industry, and added commercial support staffing in the embassies, in Enterprise Ireland, in Bord BIA, and in IDA offices to pump prime Irish exporters into the fast growing emerging markets,'' he stated.
