Many big pharma companies, like Eli Lilly (LLY 2.13%) 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 (NVO 1.88%), 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.