Pharmaceutical companies developed a few varieties of artificial blood in the 1980s and 1990s, but many abandoned their research after heart attacks, strokes and deaths in human trials. Some early formulas also caused capillaries to collapse and blood pressure to skyrocket. However, additional research has led to several specific blood substitutes in two classes — hemoglobin-based oxygen carriers (HBOCs) and perflourocarbons (PFCs). Some of these substitutes are nearing the end of their testing phase and may be available to hospitals soon. Others are already in use. For example, an HBOC called Hemopure is currently used in hospitals in South Africa, where the spread of HIV has threatened the blood supply. A PFC-based oxygen carrier called Oxygent is in the late stages of human trials in Europe and North America.

The two types have dramatically different chemical structures, but they both work primarily through passive diffusion. Passive diffusion takes advantage of gasses’ tendency to move from areas of greater concentration to areas lesser concentration until it reaches a state of equilibrium. In the human body, oxygen moves from the lungs (high concentration) to the blood (low concentration). Then, once the blood reaches the capillaries, the oxygen moves from the blood (high concentration) to the tissues (low concentration).

Artificial Blood Controversy

At first glance, artificial blood seems like a good thing. It has a longer shelf life than human blood. Since the manufacturing process can include sterilization, it doesn’t carry the risk for disease transmission. Doctors can administer it to patients of any blood type. In addition, many people who cannot accept blood transfusions for religious reasons can accept artificial blood, particularly PFCs, which are not derived from blood.
However, artificial blood has been at the center of several controversies. Doctors abandoned the use of HemAssist, the first HBOC tested on humans in the United States, after patients who received the HBOC died more often than those who received donated blood. Sometimes, pharmaceutical companies have had trouble proving that their oxygen carriers are effective. Part of this is because artificial blood is different from real blood, so it can be difficult to develop accurate methods for comparison. In other cases, such as when artificial blood is used to deliver oxygen through swollen brain tissue, the results can be hard to quantify.
Another source of controversy has involved artificial blood studies. From 2004 to 2006, Northfield Laboratories began testing an HBOC called PolyHeme on trauma patients. The study took place at more than 20 hospitals around the United States. Since many trauma patients are unconscious and can’t give consent for medical procedures, the Food and Drug Administration (FDA) approved the test as a no-consent study. In other words, doctors could give patients PolyHeme instead of real blood without asking first.
Source:
Complete details on Artificial Blood and how it works can be found in the below link

http://science.howstuffworks.com/innovation/everyday-innovations/artificial-blood2.htm

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