The NSW government wants to transform the harbourside Bays precinct into a bustling technology hub, but it is western Sydney's health hub that should be the state's innovation engine, business leaders say.

Westmead health precinct, already one of the largest in Australia, could become the state's silicon valley of health innovation, generating up to 50,000 jobs during the next two decades, according to a new report that hopes to convince the government and the private sector to redirect their focus, and money, west.

With a further 1 million people set to call western Sydney home during the next 15 years, Sydney Business Chamber's western Sydney director David Borger said Westmead, near Parramatta, had the "magical mix" of research facilities and healthcare services from which to build a brain hub.

"Westmead is the mothership of medical science in NSW," Mr Borger said. "It stands out as possibly the biggest opportunity for intensive knowledge job growth in the region."