I asked him how Khan could have gotten away with so much for so long. He said, "It is a cultural trait. The Western assumption that law should treat everyone the same way is no longer applicable in this country, in this culture. In Pakistan relationships exist only on an individual level, and as an individual I am entitled to forgive you or penalize you no matter what the law says. It is a feudal culture—or a degenerated feudal culture. That is why there is no law for the elites in Pakistan—why they do whatever they want to do. So your question of why nobody investigated A. Q. Khan? He must have had allies in high places who ignored his activities. You've given us the bomb. All power to you."

Mr. Benner handed over a detailed report on the case and called a top Beijing cop whom he has worked with for years. Almost a year after Mr. Benner's initial approach, Chinese police conducted several major raids in August and September, arresting 12 people and seizing nearly half a million pills.

While police are sometimes helpful, Pfizer feels it is often bucking up against Beijing's "tacit acceptance of counterfeiting," says John Theriault, Pfizer's vice president of global corporate security.

Nowhere have counterfeiters grown more sophisticated than in China, where the manufacture of fake goods from computers to cars has taken off. Pirated copies of Western movies, such as "Harry Potter and the Goblet of Fire" late last year, are available on the streets of Chinese cities just days after they're released in theaters. General Motors Corp. accused Chinese auto maker Chery Automobile Co., of using stolen design information to produce a car that is a virtual replica of GM's Spark minicar -- a claim the U.S. government publicly backs.