Major pharmaceutical firms have begun incorporating AI into research and production processes.

Shijiazhuang Yiling Pharmaceutical Co Ltd said its AI-driven drug discovery platform has cut research cycles by approximately 30 percent and identified dozens of protein targets linked to aging-related diseases.

Meanwhile, Good Doctor Group has built an automated smart-manufacturing and biological breeding base in Sichuan province. Powered by thousands of digital control points regulating environmental conditions and extraction processes, the facility achieves about a 98 percent automation rate, boosting production efficiency by up to 30 percent while reducing quality deviations, according to Geng.

In distribution, firms such as Kangmei Pharmaceutical are combining blockchain technology with AI to track herbal medicines from cultivation to retail, improving transparency and safety oversight across the supply chain.

The government has simultaneously stepped up regulatory upgrades to push high-quality industry development, with reforms targeting the re-registration of legacy TCM products with incomplete safety information, a move aimed at phasing out outdated products and raising overall industry standards. Such reforms, industry analysts said, could address a critical obstacle to TCM's global growth: the lack of unified quality and clinical standards.

Despite growing interest in traditional medicine worldwide, regulatory barriers remain high in Western markets where herbal medicines must meet strict clinical evidence and manufacturing standards.

According to customs data, China's exports of TCM products reached about $5.09 billion in 2025, although shipments declined slightly from the previous year. Exports remain dominated by relatively low-value raw herbs and extracts rather than high-value finished medicines.

That pattern reflects deeper structural challenges, including intellectual-property protection and quality standardization, according to Liu.

"The core competitiveness of TCM lies in its complex, multi-compound formulas," Liu said. "Under the current international patent system, companies seeking patent protection must fully disclose their core prescriptions and formulation logic."

"Given that proprietary Chinese medicines still face significant hurdles in achieving drug-market approval in major overseas markets in the near term, China needs IP protection mechanisms better suited to the characteristics of TCM. Stronger protection for clinically proven products could help build a pipeline for future international expansion," Liu added.

As of July 2025, TCM was practiced in 196 countries and regions, while acupuncture was recognized in 113 member states of the World Health Organization, according to data from the National Health Commission.

Yet analysts say the industry's global expansion will depend on whether Chinese firms can produce stronger scientific evidence for the safety and efficacy of traditional remedies, while simultaneously establishing an internationally recognized framework for TCM standards and IP protection.

"The next five years will be a crucial period for the transformation and upgrading of the TCM industry," Guo Lanping, director of the Institute of Chinese Materia Medica at the China Academy of Chinese Medical Sciences, said in an interview with Xinhua News Agency.

She said that as the new policy measures take effect, the industry is expected to move further toward "higher quality and greater modernization". Backed by policy support, AI innovation and industrial upgrading, China is poised to reposition its traditional medical heritage as a modern, tech-driven pharmaceutical sector with global competitiveness.