NSW Police are investigating whether a "grubby" clandestine drug lab uncovered in Sydney's south-west produced MDMA pills that killed two people at the Defqon.1 dance festival.

Key points: Police uncover a large commercial drug lab in south-west Sydney

Police uncover a large commercial drug lab in south-west Sydney They allege drugs found there are linked to those supplied at September's Defqon.1 festival in Penrith

They allege drugs found there are linked to those supplied at September's Defqon.1 festival in Penrith Police also allege the drug lab and drug dealers at Defqon.1 are linked to motorcycle gangs

Police are also alleging links between the drug lab, and a number of people dealing drugs at Defqon.1, to "outlaw motorcycle gangs".

A 23-year-old man and a 19-year-old woman died and another 11 people were hospitalised after taking drugs at the "hardstyle" music festival at Penrith in September.

NSW Police Acting Commander State Crime Command Stuart Smith said $5.2 million worth of prohibited drugs were discovered in a large commercial drug lab at Mount Hunter, west of Camden.

Acting Commander Smith said the drug lab had been there for at least two years and was "filthy dirty".

"It was a grubby lab," he said.

"They are manufactured with toxic chemicals, these particular drugs, they are not the things that you want to be putting into your system."

More than 20 kilograms of MDMA powder and pills, 28 litres of GBH and 13.5 kilograms of precursor drugs were among items seized, along with a pill press that could churn out one pill per second.

Police allege members of outlaw motorcycle gangs were dealing drugs at this year's Defqon.1 music festival. ( Facebook: Defqon.1 )

Acting Commander Smith said forensic testing of the drugs and precursors would determine whether there was a definitive link.

However he said a "parent chemical", known as MDA, which was found at the lab had also been found in the 11 people who were hospitalised from overdoses.

He also said triangle-shaped pill stamps found on the premises were "not dissimilar" to those seized at Defqon.1.

'He didn't act alone', police allege

A 39-year-old man was arrested and charged with manufacturing and supplying a large commercial quantity of drugs and appeared at Campbelltown Local Court on Friday where he was refused bail.

He will appear in court again on December 19.

Police allegedly uncovered $5.2 million worth of drugs at the property. ( Supplied: ABC News )

Acting Commander Smith alleged the man had associations with motorcycle gangs.

"The lab was so large and its operation so sophisticated, we don't think this individual acted alone," he said.

"In terms of Defqon.1 itself, a number of the dealers that arrived there including an individual that went to hospital, are also associated with outlaw motorcycle gangs.

"In particular, one of the dealers that arrived there that day had a very large quantity, 240 grams, of a prohibited drug, including a number of tablets, so we believe that there is a link."

Tough drug supply laws considered

Following the deaths, Premier Gladys Berejiklian called for Defqon.1 to be banned from NSW.

She set up an "expert panel" which recommended tougher penalties for drug dealers who supply substances that kill people, including a maximum sentence of 25 years in jail.

The exact penalty will be determined by the Attorney General, but Police Commissioner Mick Fuller has said it would be on par with manslaughter.

Pill testing was not considered by the panel, after Ms Berejiklian indicated it went against the government's "zero tolerance" policy on drugs.

Acting Commander Smith would not be drawn on whether the 39-year-old man could be subject to new laws and said the proposed laws were a matter for the government.