The manufacture of a blend containing the active pharmaceutical ingredient (API) and inert excipients is a precursor for the production of most pharmaceutical capsules and tablets. However, if there is a net water gain or preferential loss of API during production, the potency of the final drug product may be less than the target value. We use a mass balance to predict the mean potency loss during the production of a blend via wet granulation and fluidized bed drying. The result is an explicit analytical equation for the change in blend potency a function of net water gain, solids losses (both regular and high-potency), and the fraction of excipients added extragranularly. This model predicts that each 1% gain in moisture content (as determined by a loss on drying test) will decrease the API concentration of the final blend at least 1% LC. The effect of pre-blend solid losses increases with their degree of superpotency. This work supports Quality by Design by providing a rational method to set the process design space to minimize blend potency losses. When an overage is necessary, the model can help justify it by providing a quantitative, first-principles understanding of the sources of potency loss. The analysis is applicable to other manufacturing processes where the primary sources of potency loss are net water gain and/or mass losses.