The invention discloses a process to make dermaceutical cream containing Fusidic acid which is formed in situ from Sodium Fusidate as the starting raw material, wherein Sodium Fusidate is converted into Fusidic acid under oxygen-free environment created using inert gas, preferably nitrogen. The cream produced by the process of the present invention has greater shelf-life stability and the finer particle size of the API than the conventional creams containing Fusidic acid. The cream produced by the process of the present invention contains Fusidic acid as the API that has been formed in situ from Sodium Fusidate, in a cream base comprising a preservative, an acid, a co-solvent, an emulsifier and a waxy material along with water, preferably purified water. The cream produced by the process of the present invention further optionally contains an ingredient selected from a group comprising, a buffering agent, an anti oxidant, a chelating agent, and a humectant, or any combination thereof.
