Abstract: The Chinese herbal medicine biotechnology industry in Taiwan province contains four parts, namely biotechnology and new pharmaceutical, traditional pharmaceutical, health food, and traditional food. Despite energetic support and active promotion from Taiwan province, the Chinese herbal medicine market and industry development make little progress and lack in a clear development strategy. In order to find out the current status and restricting factors of Chinese herbal medicine biotechnology industry in Taiwan province, to facilitate Taiwan agricultural development to advance toward high-new agriculture, and to alleviate the problems of agriculture, countryside and farmers and enhance people's health, this article attempts to establish econometric model for estimating the main products, main production factors, output price elasticity, supply and demand price elasticity, technological trends, and so on. The study also aims to determine the direction of industry and technology development and give corresponding proposals concerning the aspects of supply, demand and technology.