In recent years, the price of traditional Chinese medicinal materials soars continuously, and the resulting price risk increasingly looms large, which has critically affected midstream and downstream industries and peoples' demand for drug, and imperiled healthy and orderly development of traditional Chinese medicinal industries. Based on the status quo of continuous skyrocketing price of traditional Chinese medicinal materials at present, we winkle out the root cause of soaring price as follows: the supply and demand lose balance; the production costs hike up; there are other factors responsible for soaring price. This paper further analyses the impact of sharp increase in price of traditional Chinese medicinal materials on ail links of industry chain as follows: the medicinal herb growers never benefit from soaring price; the counterfeiters and forgers in midstream industry increase; the gross profit rate of Chinese medicine enterprises declines. In accordance with the risk arising from abnormal fluctuation in price of traditional Chinese medicinal materials, corresponding precautionary measures are put forward as follows: promote the quality of traditional Chinese medicinal materials through management of value chain; curtail the production and management cost of traditional Chinese medicinal materials through management of organization chain; stabilize price of traditional Chinese medicinal materials through management of information chain; reduce transaction cost of traditional Chinese medicinal materials through management of logistics chain.