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During aqueous drug-layer coating, drug substance(s) are exposed to water and elevated temperatures which can lead to water-mediated process induced transformations (PITs). The effects of aqueous drug-layer coating of pellets (Cellets®) on the anhydrous piroxicam, PRX, were investigated in the miniaturized coating equipment and with free films. Hydroxypropyl methylcellulose (HPMC) was used as a carrier coating polymer. Free films were prepared by using an in-house small-scale rotating plate system equipped with an atomization air nozzle. Raman spectroscopy, X-ray powder diffraction (XRPD), differential scanning calorimetry (DSC), and scanning electron microscopy (SEM) were used to characterize the solid-state properties and surface morphology of the pellets and free films. The results showed that anhydrous PRX form I (AH) and monohydrate (MH) were stable during drug-layer coating, but amorphous PRX in solid dispersion (SD) crystallized as MH already after 10 min of coating. Furthermore, the increase in a dissolution rate was achieved from the drug-layer coated inert pellets compared to powder forms. In conclusion, water-mediated solid-state PITs of amorphous PRX is evident during aqueous-based drug-layer coating of pellets, and solid-state change can be verified using Raman spectroscopy.Anhydrous piroxicam form I and piroxicam monohydrate were stable during an aqueous drug layer coating of pellets but a solid state transformation of amorphous piroxicam to piroxicam monohydrate occurred.