In an era of creative economy, innovation in distribution channels brings an organization a competitive advantage as it helps increasing organizational abilities in accessing their target customers. This research study has an objective to explore problems and limitations of adopting ordinary distribution channels, and to examine strategic concept and strategic impelemtation innovation in distribution channels through a case study of using government pharmaceutical organization (GPO) as a case study. Using qualitative research methods, research results show that with a case of new innovation of GPO products; cosmeceutical, selling through traditional trade pharmacies and GPO pharmacies. The led to misled to a target customer that new innovation GPO cosmeceutical products are medicines made to only cure illnesses and have to be presciribed by doctors. Therefore with a new innovation of distribution channels, modern trade with delivery service and dealer, it helps GPO expanding market of new innovation cosmecceutical.