Microcrystalline cellulose 19 parts was combined with sodium carboxymethylcellulose, hydroxypropylmethyl cellulose, hydroxypropyl cellulose or polyvinylpyrrolidone one part, either by spray-drying or physical mixing. This combined excipient (20%) mixed with lactose (80%) and water was added to aid formation of pellets by the process of extrusion–spheronization. Spray-dry combined excipient produced pellets with higher yield, better sphericity and improved tolerance to minor variation in the level of water added, compared with the physical mix excipient. Physicochemical testing based on scanning electron microscopy with energy dispersive analysis, differential scanning calorimetry and X-ray diffraction analysis, indicated that the spray-drying with the hydrophilic polymer caused disintegration of the microcrystalline cellulose component into smaller crystallites, favouring its more uniform dispersion throughout the lactose during subsequent processing. The hydroxypropyl cellulose or polyvinylpyrrolidone containing excipients were the most satisfactory of the hydrophilic polymers examined, because they had the least adhesive strength favouring maximum yield of highly spherical pellets.