Three scientists have shared this year’s Nobel prize in physiology or medicine for discovering how the body responds to changes in oxygen levels, one of the most essential processes for life.

William Kaelin Jr at the Dana-Farber Cancer Institute and Harvard University in Massachusetts, Sir Peter Ratcliffe at Oxford University and the Francis Crick Institute in London, and Gregg Semenza at Johns Hopkins University in Baltimore, Maryland, worked out how cells sense falling oxygen levels and respond by making new blood cells and vessels.

Beyond describing a fundamental physiological process that enables animals to thrive in some of the highest-altitude regions on Earth, the mechanism has given researchers new routes to treatments for anaemia, cancer, heart disease and other conditions.

Ratcliffe was summoned from a lab meeting in Oxford to take the call from Stockholm. “I tried to make sure it wasn’t some friend down the road having a laugh at my expense,” he told the Guardian. “Then I accepted the news and had a think about how I was going to reorder my day.”

Ratcliffe had spent the weekend working on an EU synergy grant and had not imagined his morning taking such a turn. “When I got up this morning I didn’t have any expectation or make any contingency plans for the announcement at all,” he said.

On finishing the call he returned to his meeting and, at the request of the Nobel committee, carried on without a word. At least one scientist had her suspicions, however, having noticed he had left a coffee in the room and returned with a tea. “She’s a scientist, so trained to draw deductions from the things she observes,” Ratcliffe said. “I’d decided I needed a little less agitation rather than more.”

The three laureates will share the 9m Swedish kronor (£740,000) prize equally, according to the Karolinska Institute in Stockholm. Asked what he intended to do with the windfall, Ratcliffe said: “I’ll be discussing that with my wife in private. But it’ll be something good.” A party was on the cards, he said, but not immediately. “I’m trying to stay sober because it’s going to be a busy day.”

Kaelin said he was half-asleep when his phone went. “I was aware as a scientist that if you get a phone call at 5am with too many digits, it’s sometimes very good news, and my heart started racing,” he said. “It was all a bit surreal.”

The trio won the prestigious Lasker prize in 2016. In work that spanned more than two decades, the researchers teased apart different aspects of how cells in the body first sense and then respond to low oxygen levels. The crucial gas is used by tiny structures called mitochondria found in nearly all animal cells to convert food into useful energy.

The scientists showed that when oxygen is in short supply, a protein complex that Semenza called hypoxia-inducible factor, or HIF, builds up in nearly all the cells in the body. The rise in HIF has a number of effects but most notably ramps up the activity of a gene used to produce erythropoietin (EPO), a hormone that in turn boosts the creation of oxygen-carrying red blood cells.

Randall Johnson, a professor of molecular physiology and pathology at Cambridge University, said this year’s Nobel laureates “have greatly expanded our knowledge of how physiological response makes life possible”.

He said the role of HIF was crucial from the earliest days of life. “If an embryo doesn’t have the HIF gene it won’t survive past very early embryogenesis. Even in the womb our bodies need this gene to do everything they do.”

The work has led to the development of a number of drugs such as roxadustat and daprodustat, which treat anaemia by fooling the body into thinking it is at high altitude, making it churn out more red blood cells. Roxadustat is on the market in China and is being assessed by European regulators.

Similar drugs aim to help heart disease and lung cancer patients who struggle to get enough oxygen into their bloodstream. More experimental drugs based on the finding seek to prevent other cancers growing by blocking their ability to make new blood vessels.

Venki Ramakrishnan, the president of the Royal Society, said the prize was “richly deserved” by all three winners. “Oxygen is the vital ingredient for the survival of every cell in our bodies. Too little or too much can spell disaster. Understanding how evolution has equipped cells to detect and respond to fluctuating oxygen levels helps answer fundamental questions about how animal life emerged.”

Ratcliffe praised the team he worked with in the years it took to decipher how cells adapted to changes in oxygen levels. “At first, none of us knew precisely what we were doing,” he said. “But there was a lot of enthusiasm.”