As far as I can tell, it's a made-up scam.
Almost all of the research on this peptide is done by one person, Predrag Sikirić, who also discovered and patented it.
The claim is that this is the "important part" of some other, larger protein that he claims to have isolated from the gut. E.g. from Jelovac, N., Sikiric, P., Rucman, R., Petek, M., Marovic, A., Perovic, D., ... & Prkacin, I. (1999). Pentadecapeptide BPC 157 attenuates disturbances induced by neuroleptics: the effect on catalepsy and gastric ulcers in mice and rats. European journal of pharmacology, 379(1), 19-31.:
We have identified a new human gastric juice protein with mucosal protective properties and a huge range of organoprotective effects, and with MW 40,000 (determined by gel chromatography), code-named BPC.
...
In line with this, a 15-amino acid fragment (BPC 157), with amino acid sequence, Gly–Glu–Pro–Pro–Pro–Gly–Lys–Pro–Ala–Asp–Asp–Ala–Gly–Leu–Val, MW 1419, and apparently no sequence homology to known gut peptides, thought to be essential for activity of an entire peptide, was characterized and synthesized
Okay, so apparently this MW 40,000 protein has a "huge range of organoprotective effects", except... it doesn't seem it's actually been studied, ever. Let us follow some citations... The earliest paper those passages refer to is this one:
Sikirić, P., Petek, M., Ručman, R., Seiwerth, S., Grabarević, Z., Rotkvić, I., ... & Karakas, I. (1993). A new gastric juice peptide, BPC. An overview of the stomach-stress-organoprotection hypothesis and beneficial effects of BPC. Journal of Physiology-Paris, 87(5), 313-327.
From the paper:
A new gastric juice peptide, Mr 40000, named
BPC has recently been isolated (in preparation)
and its huge range of organoprotective effects has
been described. In this, a 15 amino acid fragment
(BPC 157) thought to be essential for its activity
has been characterized (Sikiri6 et al, 1991a,b,
c,d,e,f,g, 1992a,b).
Okay, so they've already got this peptide from gastric juice, already found and "fully characterized" (quote from the abstract) it, all in just 2 years. I can't think of anything in biology that is fully characterized and it takes decades to do this kind of work with modern methods, yet this was done by one group in a couple years! Within just those a,b,c,d,e,f,g references in 1991 they've already shown that this peptide cures kidney lesions, pancreatitis, colon hypersensitivity, diabetes, liver lesions, and stomach ulcers. And all of this work on the peptide was completed and published before the discovery of the original MW 40,000 protein was ever published (that's the "in preparation" note from the quote; I can't find evidence that the "in preparation" manuscript was ever published). All of these papers with the same lead author. This is not credible, at all: no one can perform all this work. My best guess is that it is made up entirely. The "1991a" reference is this one:
Sikiric, P., Petek, M., Rucman, R., Rotkvic, I., Seiwerth, S., Grabarevic, Z., ... & Udovicic, I. (1991). Hypothesis: Stomach stress response, diagnostic and therapeutical value: a new approach in organoprotection. Exp Clin Gastroenterol, 1, 15-16.
Along with several of these other papers, it makes up the first volume of the journal "Exp Clin Gastroenterol", which appears to have been created solely to host this new, influential work. I can't really find any trace of it. Google Scholar can't find any of these papers. There is an (also sketchy) journal with a similar name hosted at "gastrossr (dot) org" that only took that name in 2002 but does not seem to have any relation.
So, let's review...
A larger protein, never before described but supposedly isolated from the stomach, cures everything. Before this protein is described in the literature (nothing published on it at all), one person has already identified and synthesized the important 15 amino acids from it that are responsible for all of its activities across all body systems. All further research is done with this peptide.
The peptide and precursor protein are unrelated to any other protein (e.g.: your BLAST attempt; also, there is no mention of any related protein in any of these papers, including recent ones).
The peptide is patented by the person who publishes all the papers about it's benefits.
The original work describing the peptide was published in a brand-new journal; I haven't found any evidence that the journal actually exists. I suspect it's a creation of the person who "published" all of its content, including a dozen first-authored papers in the first year that this peptide was discovered.
The name: BPC, stands for "Body Protective Compound". So, before doing this research categorizing all the ways that it protects the body, it was already pre-ordained with the name "body protective compound". I assume this is because the author already knew what his results were going to show, because he planned to make it all up.
Can someone tell me how the body creates BPC-157 naturally, either from what protein it's a breakdown product or otherwise how it gets into human gastric juice?
I can't find any evidence that it does; in a 'research' context it's an entirely synthetic peptide. The papers supporting it seem to be entirely synthetic, as well. As of now there is only one result for a search of "BPC 157" as a treatment/intervention on clinicaltrials.gov; this was a Phase I study that was cancelled; it's not clear whether a single patient was ever enrolled. You can find sources that sell or claim to sell it, in some cases labeled as "for horses", in others as a dietary supplement for humans while repeating some of the dodgy claims in these papers, despite never being studied in people. I won't link to any of these sources for what I think are obvious reasons.
