well when you switch to the virtual environment. you should type

which python

and if it returns the path where your virtual environment exists then its okay you can directly run this command.

$ python setup.py build

$ python setup.py install

but if it gives the global level path which is not your virtualenv's path then you should try using

$ ~/.virtualenv/python-env/bin/python setup.py build

$ ~/.virtualenv/python-env/bin/python setup.py inst