Many big pharma companies, like Eli Lilly (NYSE:LLY) and Merck, embrace the strategy of diversification. Both companies not only market medications for a wide range of diseases, but they also sell animal health products. Merck also has a large consumer health division, which sells products like Coppertone sunscreen. Danish pharmaceutical company Novo Nordisk (NYSE:NVO), on the other hand, has focused primarily on selling products that treat diabetes.

In the following video, Motley Fool Rule Breakers analyst Simon Erickson and health-care bureau chief Max Macaluso discuss the pros and cons of such a focused strategy. They also look at ways Novo is trying to expand its business into new therapeutic areas, including obesity.

Max Macaluso, Ph.D. has no position in any stocks mentioned. Simon Erickson owns shares of Novo Nordisk. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.