This paper summarized and comprehensively analyzed 5 main use forms of Chinese Materia Medica(CMM)-decoction pieces of CMM, prescription granules of CMM, hospital preparations, classical prescriptions, new medicine of CMM, from the scope of use, policy and approval, medical insurance policy and so on.Prospects of the above 5 use forms of CMM were analyzed and evaluated for research, development and investment of pharmaceutical companies.In the 5 forms of CMM, the new medicine of CMM is the direction and mainstream of innovation and development of CMM.Main problems in the process of innovation and development of CMM are analyzed, and the solutions are put forward from both the national level and the enterprise level, so as to provide a way of thinking for the industry.