The percentage of new chemical entities synthesised with low aqueous solubility and high therapeutic efficacy is growing, this presents major challenges for the drug delivery scientists. The role of physicochemical properties in identification of suitable drug candidates for oral lipid-based delivery systems is discussed. A knowledge of the interplay of physicochemical and biopharmaceutical drug properties with the physiological environment of the gastro-intestinal tract (GIT), as a prerequisite to successful formulation design, is reviewed. The importance of excipient selection with an emphasis on bioactive excipients is stressed. The need for more examples of in vitro-in Vivo Correlations as a means of maximizing the development potential and commercial future for lipid-based formulations, and, promoting confidence within the industry for these delivery systems is highlighted. (C) 2007 Elsevier B.V. All rights reserved.