With the rapid development of information technology, there is higher requirement for the pharmaceutical industry to focus on technological innovation capability.According to some related researches, the method of system dynamics and the simulation tool of Vensim were introduced.The system dynamics model of technological innovation was established to do the in-depth study of the internal structure of technological innovation system and the feedback loop between various elements.Then the software of Vensim was used to perform the model validation test, and finally the impacts of new products share, degradation rate of technical knowledge, and R & D investment of technological innovation were further analyzed.The results indicate that to maintain technological innovation, the company's new products proportion should not be too high, with the increase of technical knowledge degradation rate, enterprises should pay more attention to the accumulation of technical knowledge, and high R & D investment does not necessarily enhance the capability of technological innovation.