cherry-pick prep_xds.sh changes from v1.37.x (#27963)

diff --git a/tools/run_tests/helper_scripts/prep_xds.sh b/tools/run_tests/helper_scripts/prep_xds.sh
index 5a65bc3..6187c88 100755
--- a/tools/run_tests/helper_scripts/prep_xds.sh
+++ b/tools/run_tests/helper_scripts/prep_xds.sh
@@ -20,7 +20,8 @@
 
 sudo apt-get install -y python3-pip
 sudo python3 -m pip install --upgrade pip
-sudo python3 -m pip install grpcio==1.31.0 grpcio-tools==1.31.0 google-api-python-client google-auth-httplib2 oauth2client
+sudo python3 -m pip install --upgrade setuptools
+sudo python3 -m pip install --upgrade grpcio==1.31.0 grpcio-tools==1.31.0 protobuf google-api-python-client google-auth-httplib2 oauth2client xds-protos
 
 # Prepare generated Python code.
 TOOLS_DIR=tools/run_tests